Problem 8-14 Intangibles (LO 8.6)

Derek purchases a small business from Art on July 30, 2021. He paid the following amounts for the business:

Fixed assets	$180,000
Goodwill	40,000
Covenant not to compete	30,000
Total	$250,000

a. How much of the $250,000 purchase price is for Section 197 intangible assets?

b. What amount can Derek deduct on his 2021 tax return as Section 197 intangible amortization?