Intangible Asset? Goodwill?

[Terry D EA]

Have a client that sub contracts FedEx Delivery routes. This is the first year for this business. The business is an S-Corp with all elections being made timely. He purchased a few established routes that generate income and the purchase price of all routes totals 120K. In my opinion, these routes are intangible assets and are not depreciable. I have classified the routes as Goodwill intangible that is non-amortizable.The routes have the potential to produce revenue with the possibility of increase. If I am not classifying this correctly, please give me some other direction to take.

[Terry D EA]

After doing some research from the ISB, it appears the routes acquired can be listed as an intangible and doing so would require them to be amortized. Still unclear as to whether they can be classified as goodwill.

[michaelmars]

franchise fee? customer list? the tax effect is the same

[Terry D EA]

I agree the tax effect would be the same and you do raise a set of interesting options. Hmmm

[Terry D EA]

Okay, it appears the best treatment of these delivery routes is they are an intangible with 15 year amortization. The numbers that were given to me were purchase prices for the routes themselves so I now am convinced that goodwill doesn't apply simply because there wasn't any mention of goodwill during the transactions. While I would agree the routes may have been purchased at a value higher than they may have actually been worth, there isn't any supporting documentation. If there are any other suggestions, I would be happy to entertain them.