Goodwill

Goodwill means:
an intangible but recognized business asset that is the result of such features as the production or sale of reputable brand-name products, a good relationship with customers and suppliers, and a respected standing of the business in its community. Goodwill possesses an indefinite life (e.g., not amortized) but purchased goodwill after August 10, 1993 is amortized over 15 years. Reg. §l.l67(a)-3 and Former IRC (check if this IRC provision is current here) §197. See Section 197 Intangibles.

Example of Goodwill:

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Diversified Enterprises, Inc., bought Acme Hardware Co. The purchaser paid a total of $200,000, which included $100,000 for the land and buildings, $50,000 for inventory, and $50,000 for goodwill. The goodwill can be amortized over 15 years.

U.S. and other Developed Countries International Tax Meaning

Intangible asset which consists of the value of the earning capacity, location, marketing organization, reputation, clientele, etc. of a trade or business. Goodwill can be transferred for a consideration to another entrepreneur upon the sale of the business as a going concern.

Description and Definition of Goodwill

An intangible asset which enables a business to continue to earn a profit which is in excess of the normal amount of profit earned by other businesses of a similar type. The goodwill of a business may be due to a particularly favorable location, its reputation in the community, or the quality of the company and its employees.

Resources

See Also

Further Reading

• Goodwill in the West's Tax Law Dictionary
• Goodwill in “A Dictionary of Taxation”