Cassie purchases a sole proprietorship for $125,000.The fair market value of the tangible assets is $100,000 and the agreed to value of goodwill is $15,000.Assuming there are no other intangible assets,Cassie's basis for the tangible assets is $108,696 ($100,000 + $8,696)and her basis for the goodwill is $16,304 ($15,000 + $1,304).

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Cassie's basis for the tangible assets should be $100,000, and her basis for the goodwill should be $15,000. The total purchase price of $125,000 is allocated to the tangible assets and goodwill based on their agreed values, without any additional amounts.

Cassie Purchases a Sole Proprietorship for $125,000