Asset purchase on tax return if price may be negotiated later

Forum|Forum|6 years ago
June 26, 2020
1 reply
21 views

Bought a company in an asset purchase in 2019 - How do you book the assets and goodwill on the depreciation screen 22 in Lacerte if half was paid in 2019 and the remainder is to be paid in future years? Say the assets/goodwill total $100,000 and you paid $50,000 down but the price may be re-negotiated next year. What is the correct way to handle on a tax return?

Thank you

Lacerte Tax

This topic has been closed for replies.

George4Tacks

Level 15

Complete 8594 per the current sales agreement and set up your assets accordingly. You enter them as currently agreed to.

IF something changes in the future, deal with it then. Is there some understanding as to which aspects of the sales price might be re-negotiated?

Answers are easy. Questions are hard!

L

LSTAXAuthor

Level 5

Thanks George - I have set up the goodwill as $100,000 and will amortize until they change anything. Aparently, the buyer will not get the help he thought he would and thinks he should have paid $80,000 not $100,000. If he succeeds and only has to pay the remaining $30,000 instead of $50,000 how would I handle on a future tax return because amortizing the full $100,000 would be taking too much amortization expense, wouldn't it?

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