Sale of Goodwill

[David]

I know there aren't supposed to be any dumb questions, but.....

TP sold his business assets. He had goodwill on the books that wasn't fully amortized. Part of the sale price is allocated to goodwill.

Do I dispose of the current goodwill by showing no sale received and writing off the remaining balance. Then show the sale of goodwill with no cost basis?

Or, do I dispose of the current goodwill by showing the sale price allocated to goodwill as proceeds received and net that against the remaining book value to calculate the gain?

Thanks.

[jklcpa]

The portion of sale proceeds relating to intangibles is a class VI asset for reporting on the Form 8594. It would be a sec 1231 gain or loss. 

You might find Pub 544 helpful, scroll down or search for "Dispositions of Intangible Property"

If you want the cite:

Code sec 197(f)(1):

(f) Special rules (1) Treatment of certain dispositions, etc.

(A) In general

If there is a disposition of any amortizable section 197 intangible acquired in a transaction or series of related transactions (or any such intangible becomes worthless) and one or more other amortizable section 197 intangibles acquired in such transaction or series of related transactions are retained—

(i) no loss shall be recognized by reason of such disposition (or such worthlessness), and

(ii) appropriate adjustments to the adjusted bases of such retained intangibles shall be made for any loss not recognized under clause (i).
 

[Abby Normal]

(ii) appropriate adjustments to the adjusted bases of such retained intangibles shall be made for any loss not recognized under clause (i).
 

Why can't they just write this in english?!