will 47,720 nant not to compete 59,650 $345,970 v much of the $345,970 purchase price is for Section 197 intangible assets? t amount can Derek deduct on his 2020 tax return as Section 197 intangible an ired, round the final answer to the nearest dollar. Use months, not day

CONCEPTS IN FED.TAX.,2020-W/ACCESS
20th Edition
ISBN:9780357110362
Author:Murphy
Publisher:Murphy
Chapter3: Income Sources
Section: Chapter Questions
Problem 85P
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Derek purchases a small business from Art on September 1, 2020. He paid the following amounts for the business:
Fixed assets
$238,600
Goodwill
47,720
Covenant not to compete
59,650
Total
$345,970
a. How much of the $345,970 purchase price is for Section 197 intangible assets?
$4
b. What amount can Derek deduct on his 2020 tax return as Section 197 intangible amortization?
If required, round the final answer to the nearest dollar. Use months, not days, in your computations.
$
Transcribed Image Text:Derek purchases a small business from Art on September 1, 2020. He paid the following amounts for the business: Fixed assets $238,600 Goodwill 47,720 Covenant not to compete 59,650 Total $345,970 a. How much of the $345,970 purchase price is for Section 197 intangible assets? $4 b. What amount can Derek deduct on his 2020 tax return as Section 197 intangible amortization? If required, round the final answer to the nearest dollar. Use months, not days, in your computations. $
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