# Goodwill amortization

Writing off acquired [goodwill](https://searchspheresource.com/glossary/goodwill) and similar intangibles over fifteen years.

Section 197 of the tax code puts one clock on almost every intangible a buyer acquires, and it runs longer than most first-time buyers expect. The deduction is the adjusted basis spread evenly over fifteen years, beginning in the month the intangible was acquired, and the statute bars any other depreciation or [amortization](https://searchspheresource.com/glossary/amortization) on the same asset. What lands on that clock is broad: goodwill, [going concern](https://searchspheresource.com/glossary/going-concern) value, the workforce in place, customer lists, books and records, a license or permit granted by a government body, franchises and trade names. A covenant not to compete is on it too whenever it is entered into in connection with buying the business, so a three-year covenant still writes off over fifteen. That is why allocating price to a covenant buys a buyer no speed at all, and why the argument worth having is about the equipment classes.

In numbers: On a $4M asset deal allocating $2.4M to goodwill, the deduction is $160,000 a year for fifteen years, and moving $200k of that into a covenant not to compete changes nothing about the timing.

Source: https://searchspheresource.com/glossary/goodwill-amortization
Not dated: A definition is editorial: what a term means, why it matters, and an example. None of it reads a source that can go stale, so there is no date to take and a stamped one would be the build time wearing a costume.

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