If it exists, personal goodwill can be identified and directly sold to C-Corporation buyers in transactions structured as asset deals. By properly identifying and allocating value to personal goodwill, sellers may be able to increase after-tax proceeds. This article is the first installment of a two-part series examining transactions involving personal goodwill. In part one, we outline procedures used to recognize personal goodwill. It also presents a discussion of relevant tax court decisions and provides the analytical framework for quantifying personal goodwill. In part two, we present practical and illustrative examples that quantify potential income tax savings.

Download: Personal Goodwill Part 1