Is it still considered section 197 intangible asset even though no amortization took place?
Answer Anthony, Thanks for your question. The goodwill is considered Sec 197 property and the sale will be reported on Form 4797 in Part I if held more than 12 months because the gain in excess of amortization is a 1231 gain. Even though he did not take any amortization, you must still reduce basis by amortization allowed. This is computed on a monthly basis over 15 years with no amortization in the month of sale. The gain up to the amount of amortization allowed is Sec 1245 gain. Any additional gain is a Sec 1231 gain. Hope this helps.
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