Intangible amortization when buying/selling of a medical practice

Tax Treatment of Goodwill, Covenants, and Consulting in Medical Practice Transactions

When buying or selling a medical practice, goodwill and coventant not to competes may be including in the purchase price. In addition, the seller may enter in to some kind of a consulting agreement as part of the transaction. The tax treatment of goodwill, a covenant not to compete and a consulting agreement can be summarized as follows:

   

Buyer

Seller

Goodwill

Amortize 15 years

Sec. 1231 asset

Covenant not to compete

Amortize 15 years

Ordinary income

Consulting agreement

Deduct as incurred

Ordinary income

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