When a business is being purchased, if possible, the purchaser should bargain for more of the purchase price being allocated to goodwill and covenants not to compete rather than depreciable assets.

Question

Quizplus · Accepted Answer

Allocating more of the purchase price to depreciable assets is often preferable because it allows the purchaser to benefit from tax deductions through depreciation, whereas goodwill and covenants not to compete are amortized over a longer period, providing less immediate tax benefit.

When a Business Is Being Purchased, If Possible, the Purchaser