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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
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Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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The company purchased small cell phone business and paid 10,000

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The company purchased small cell phone business and paid 10,000 for only store goodwill in 2011 and closed the business in 2012 without sale. In this case how do we record goodwill in 2012 tax return in Form 4797? Can we enter ordinary loss in part 1 on Form 4797 (cost 10,000- sales price 0 = 10,000) ? thanks

MyVirtualCPA :

Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.

MyVirtualCPA :

The goodwill transaction is a section 1231 where if there is a gain amortization is recaptured and if there is a loss the loss is ordinary

MyVirtualCPA :

As such, you would report ordinary loss on part 1 of form 4797


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