Derek purchases a small business from Art on July 1, 2018. He paid the following amounts for

Question:

Derek purchases a small business from Art on July 1, 2018. He paid the following amounts for the business:

Fixed assets..................................$220,000

Goodwill............................................50,000

Covenant not to compete...............55,000

Total..............................................$325,000

a. How much of the $325,000 purchase price is for Section 197 intangible assets?

b. What amount can Derek deduct on his 2018 tax return as Section 197 intangible amortization?

Intangible Assets
An intangible asset is a resource controlled by an entity without physical substance. Unlike other assets, an intangible asset has no physical existence and you cannot touch it.Types of Intangible Assets and ExamplesSome examples are patented...

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