Project Description

This Tax Court decision provides the clearest distinction to date between “internal” and “external” goodwill in the event of a distribution (or sale) of assets from a corporation.  The Tax Court has ruled that a taxpayer’s wholly-owned corporation that ceased operations due to its difficulty with regulatory authorities had no goodwill. As a result, even though the taxpayer’s sons started a new business that had performed some of the same services and had some of the same customers as the father’s corporation, there was no taxable distribution of goodwill from the father’s corporation to the father and no gift from the father to the sons. Bross Trucking, Inc., TC Memo 2014-107