For tax purposes, how is amortized goodwill treated?

Amortized goodwill is treated as a tax-deductible intangible asset under IRS guidelines. The correct treatment allows for goodwill to be amortized over a specific period for tax purposes.

In this case, goodwill is amortized over a period of 15 years, which aligns with the IRS requirements established under Section 197 of the Internal Revenue Code. This section applies to the acquisition of intangible assets, including goodwill, and stipulates that these assets be amortized on a straight-line basis over 15 years.

This means that the expense related to goodwill can be spread evenly over this period, allowing businesses to reduce their taxable income gradually as the amortization is claimed each year. The approach helps in accurately reflecting the expense associated with the use of goodwill for the firm while also complying with tax regulations.

Other options suggest different amortization periods that are not in accordance with the established rules for tax purposes, which specifically outline the 15-year timeframe for amortization of goodwill.