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Allocation of purchase price; depreciation recapture on sale

Jessica purchased a business from Laura. The sale included permit, goodwill, a building, fixtures in the building, and account receivable. In what order are the assets assigned values to determine Jessica's basis in each asset

A. Goodwill, then permits, then account receivable, then building and fixtures
B. Accounts receivable, then building and fixtures, then permits, then goodwill
C. Any order that Laura and Jessica agree upon
D. Building and fixtures, then accounts receivable then permits, then goodwill

In 2010, the vehicle Clifford used as an employee business expense deopped to 40% business use. In 2008 when he put the vehicle into service, he took $4,000 section 179 expense deduction. How does the 2010 tax return reflect this change in business use

A. Enter the difference between the MACRS depreciation he could have taken had he not elected to expense $4,000 and the amount expensed on form 4797, part IV, and then carry the recapture amount to Clifford's schedule C, line 6
B. Enter $4,000 as a component of the vehicle and begin MACRS depreciation on this amount
C. Enter the difference between the MACRS depreciation he could have taken had he not elected to expense $4,000 and the amount expensed on form 4797, pat IV, and then carry the recapture amount to Clifford's form 1040, line 21
D. Encourage Clifford to take the vehicle out of service for 2010 so he will not recognize any recapture.

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Jessica purchased a business from Laura. The sale included permit, goodwill, a building, fixtures in the building, and account receivable. In what order are the assets assigned values to determine Jessica's basis in ...

Solution Summary

An allocation of purchase price, depreciation recapture on sales are examined.

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