Discussion:Non compete clauses
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Discussion Forum Index --> Basic Tax Questions --> Non compete clauses
Discussion Forum Index --> Tax Questions --> Non compete clauses
| 9 December 2007 | |
| If one has a non compete agreement for 5 years and was paid. Can the payor amortize that over 60 months or must they do it over 180 months
Neil | |
| December 9, 2007 | |
| Good question professor. Non-compete agreements that are related to the acquisition of a going concern are by definition sec 197 intangibles (regardless of the specific time period covered by the agreement) and they must be amortized over 180 months. Even if the payee opened up shop right next door to you on day one of year 6, it would be very hard for you to prove that there was NO value left to the original agreement unless you could show that ALL of the clients that you purchased ditched you and went back to him (her). Even if they all ditched, I expect part of what was purchased in your non-compete agreement was a combination of "going concern value", business reputation, location and other related intangibles....which will allow you to attract new business that you might otherwise not have been able to attract so quickly. | |
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