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In 2008 I purchased a 22-year old financial advisor business

Customer Question
from a friend who knew...
In 2008 I purchased a 22-year old financial advisor business from a friend who knew he was dying - which he did a few months after we made a deal. I've been an advisor for 29 years. I made a cash down-payment and am now making monthly payments to his widow. We made no allocation agreement regarding goodwill. The business sale included NO assets other than a list of clients, whose accounts I now manage. I have been quite successful with this additional business (even in this market). I'm now preparing my taxes for 2008 and need to know how to handle the goodwill issue. I assume I file Form 8594, and that 100% of the purchase price should be a Class VII asset.
1. Am I correct about Form 8594?
2. How do I handle the purchase elsewhere in Schedule C and Form 1040?
Thank you - Christian Eddleman
Submitted: 8 years ago.Category: Tax
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Answered in 6 minutes by:
6/2/2009
Tax Professional: RD, Certified Public Accountant (CPA) replied 8 years ago
RD
RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8,784
Experience: CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
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You are right about filing Form 8594. You will allocate the purchase price between Class VI and Class VII asset.

 

Class VI asset are customer based intangible asset.

 

You will report these as intangible asset on form 4562 and amortize it over 15 years. Amortization will reduce your schedule C income.

 

 

 

Let me know if you have any question.

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

RD
RD, Certified Public Accountant (CPA)
Category: Tax
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