Which of the Following Statements Concerning Business Goodwill Is False

question 39

Multiple Choice

Which of the following statements concerning business goodwill is false?

• A) If a business creates goodwill by developing a loyal customer base and generating brand name recognition, the tax basis in the goodwill is zero.
• B) When a taxpayer purchases a business and capitalizes the cost allocated to goodwill, the cost basis is not amortized for financial reporting purposes.
• C) When a taxpayer purchases a business and capitalizes the cost allocated to goodwill, the cost basis may be amortized over 15 years for tax purposes.
• D) The tax deduction for goodwill amortization is an unfavorable book/tax difference.

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