Discussion:Restaurant Goodwill
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Discussion Forum Index --> Advanced Tax Questions --> Restaurant Goodwill
Discussion Forum Index --> Tax Questions --> Restaurant Goodwill
| 18 June 2008 | |
| Here is the situation:
Client creates an S-Corp, buys a restaurant (paying 300*** or so for goodwill) client sells restaurant (but doesn't close S-Corp, plans on buying more restaurants) and get's 500*** for good will. Has he sold all of his goodwill or has he created some of his own to keep in the S-Corp? He kept the original restaurant name when he bought and left it when he sold. facts: Restaurant was bought and sold under the name of the S-Corp. | |
| 18 June 2008 | |
| Goodwill was related to the restaurant and so it was
sold at a gain. | |
| 18 June 2008 | |
| RJ, is this the only restaurant the S corp has owned? If so I suspect you have a good argument that all of the purchased goodwill was sold (which is better for your client, less gain, right?). | |
| 23 June 2008 | |
| this is the first and only restaurant that the S corp has purchased (plans to do more in the future). | |
| 26 June 2008 | |
| All the goodwill the S corp purchased (and therefore has a basis in) was related to the restaurant, and the only goodwill that was sold related to the restaurant. The S corp may have some goodwill of its own but if so, it has no basis in it. Therefore I would say the entire cost of the goodwill, net of any Sec. 197 amortization, is part of the basis for gain on the restaurant sale. | |
Southparkcpa (talk|edits) said: | 27 June 2008 |
| Agree with KatieJ 100 percent. GW is not a fungible asset but is identified when purchased. When that asset is sold, the GW is gone. | |
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