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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Definitions:

Broca's Area

A region in the frontal lobe of the dominant hemisphere of the brain with functions linked to speech production.

Frontal Area

The frontal area, often referring to the frontal lobes of the brain, plays a critical role in decision making, personality expression, and moderating social behavior.

Occipital Lobes

The regions of the brain located at the back of the head, responsible for processing visual information from the eyes.

Prefrontal Cortex

The part of the frontal lobes of the brain involved in decision making, problem-solving, control of purposeful behaviors, consciousness, and emotions.