On April 2,Reid Inc.,a calendar year taxpayer,paid a $750,000 lump-sum price to purchase a business.The appraised FMVs of the balance sheet assets were: Which of the following statements is false?

Question

On April 2,Reid Inc.,a calendar year taxpayer,paid a $750,000 lump-sum price to purchase a business.The appraised FMVs of the balance sheet assets were:   Which of the following statements is false?

Quizplus · Accepted Answer

According to the appraisal, the purchased goodwill is valued at $150,000. As per the tax laws, goodwill cannot be amortized for tax purposes, and hence, option B is false. As a result, Reid cannot amortize the $150,000 cost for tax purposes, and this will affect its tax deductions. Hence, option B is the best answer to the question.