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Level 1
September 8, 2020
Question

Using Form 8594 for the sell of Goodwill as deferred compensation

  • September 8, 2020
  • 2 replies
  • 19 views
Client List sold using form 8594, S-Corp shareholder wants to spread out the compensation. Can this be set up in Lacerte Software - where?
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    2 replies

    sjrcpa
    Level 15
    September 8, 2020

    It's goodwill or deferred comp, or maybe some of each. They are not the same.

    Installment sale reporting on Form 6252 is available in Lacerte. Use Dispositions Screen. Can be used for sale of goodwill. Not for deferred comp.

    P.S. A client List is an other intangible asset. Neither goodwill nor deferred comp.

    The more I know the more I don’t know.
    Accountant-Man
    Level 13
    September 8, 2020

    What does the actual contract of sale say? The Buyer cannot just choose what treatment he wishes.

    Client list is an intangible, usually capital gain, usually long term. Buyer amortizes over 15 years. Seller reports gain over the life of the payments as installments.

    If there is compensation, like a Consulting Agreement, that can be paid annually per the Sales agreement, and it could be an ordinary deduction to Buyer and Ordinary income to Seller. I said "could be" since it would have to be in a separate written agreement, separate from the Sale Agreement.

    Absent a separate written agreement for consulting, it is a 15 amortization to the Buyer.

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