Amortization


M

Marion1E

I bought my father in-law's cleaning business. There is no equipment
involved just the client base. I paid a down payment and I am making
monthly payments for the remainder of the purchased business. My
understanding is that I have to amortize this on schedule C, but I am
not sure over how many years. Any help and additional comments are
greatly appreciated.
 
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B

Brew1

I bought my father in-law's cleaning business. There is no equipment
involved just the client base. I paid a down payment and I am making
monthly payments for the remainder of the purchased business. My
understanding is that I have to amortize this on schedule C, but I am
not sure over how many years. Any help and additional comments are
greatly appreciated.
Pub 535 covers this topic--180 month amortization of Sect 197
intangibles.

The amount of your down payment is irrelevant, you will use the total
cost
of the purchase to calculate the deduction. Things can get a little
stickier with
the interest (there can be "implied interest,") you and your father-in-
law may
want a consult on that.

IRS Circular 230 Disclosure: To comply with requirements imposed by
the IRS, we inform
you that any U.S. federal tax advice contained herein (including any
attachments), is not
intended or written to be used, and cannot be used, for the purposes
of (i) avoiding penalties
under the Internal Revenue Code or (ii) promoting, marketing or
recommending to another
party any transaction or matter herein.
 

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