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We purchased a company, for 10,000, asset purchase
And we assigned the 10,000 to 7 different classes per 8594
Book basis for intangibles was 4,400
Tax basis for intangibles was 4,000, with 400 being reported as Class III A/R
Book amortizes on the basis of 4,400
Tax amortizaes on the basis of 4,000
Should we create a deferred tax for the basis difference between book intangibles and tax intangibles of $400?
I do not see "deferred tax" here ... just treat each asset separately.
That's what I thought.
Someone told me whenever there is a book basis vs tax basis difference, you need to create a deferred tax
What did you mean with "treat each asset separately"?
The Class III asset will have the tax basis based on the purchase price. As long as the asset is not disposed - there is no taxable event and there is no "deferred tax"I feel that someone advised you to use a trick to have books look nice - that is a different issue. But from tax prospective - there is no deferred tax.
Thank you. You have been very helpful!