Sale of Business

[Tax Prep by Deb]

I need a little help here.  I have a client who is on the process of selling a business, S Corp, just selling assets, good will, and no compete.

The sale allocation is what they are currently working on and we have definite numbers fot the assets, but are still left with 100,000 to allocate between goodwill and non compete.  What would you recommend?  I've never been on the sale side of this, only the purchase side and it was mainly assets so not to suee about the tax consequenses other than on the sold assets.

Any thoughts would be greatly appreciated.

[ILLMAS]

Both the the goodwill and non-compete intangible assets so there basis will be zero no matter if they allocate $1 for non-compete and $99,999 for goodwill, but there it's a good idea to have a reasonable amount in case your client does compete and have to pay the fine.  I did a quick search and found this, hope it helps:

http://www.schneiderdowns.com/our-thoughts-on/business-advisors/valuing-a-non-competition-agreement

MAS

 

[Tax Prep by Deb]

Thanks for your imput.

Actually I had found the exact article that your provided, and believe we have good figures to go forward on.