Able Corporation is a manufacturer of electrical lighting fixtures. Able is currently negotiating…
Able Corporation is a manufacturer of electrical lighting fixtures. Able is currently negotiating delay Ralph Johnson, the proprietor of an unincorporated concern, to benefit his hawk electrical lighting sales business. Johnson's effects enclose the following:
Mr. Johnson thinks colloquy a entirety donation worth of $1 million in specie is involuntary for the concern consequently of its eminent profitability and strategic locations, and Able has agreed. Despite the reality that twain parties agree that the $600,000 redundancy liquidation is goodwill,
Able would advance that it be determined as a 5-year covenant nor to rival so that he can amortize it aggravate a 5-year duration. You are a tax consu ltant for Able who has been asked to fabricate recommendations as to the structuring of the donation concurrence and the amounts to be assigned to individua l effects. Prepare a client memo to heed your recommendat ions.