Sam has operated a microbrewery (sole proprietorship) in southern Oregon for the past 15 years. The business
Question:
Sam has operated a microbrewery (sole proprietorship) in southern Oregon for the past 15 years. The business has been highly profitable lately, and demand for the product will soon exceed the amount Sam can produce with his present facilities.
Marcie, a long-time fan of the brewery, has offered to invest $1,500,000 for equipment to expand production. The assets and goodwill of the brewery are currently worth $1,000,000 (tax basis is only $200,000). Sam will continue to manage the business. He is not willing to own less than 50% of whatever arrangement they arrive at. What issues should Sam and Marcie address and document before finalizing their venture?
GoodwillGoodwill is an important concept and terminology in accounting which means good reputation. The word goodwill is used at various places in accounting but it is recognized only at the time of a business combination. There are generally two types of...
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South Western Federal Taxation 2015 Essentials Of Taxation Individuals And Business Entities
ISBN: 9781285438290
18th Edition
Authors: James Smith, William Raabe, David Maloney, James Young