On November 13, Underhill Inc., a calendar year taxpayer, purchased a business for a $750,000 lump-sum price. The business’s balance sheet assets had the following appraised FMV:
Accounts receivable ……………… $ 38,000
Inventory ………………………… 177,000
Tangible personality …………….. 400,000
$615,000
a. What is the cost basis of the goodwill acquired by Underhill on the purchase of this business?
b. Compute Underhill’s goodwill amortization deduction for the year of purchase.
c. Assuming a 35 percent tax rate, compute the deferred tax asset or deferred tax liability (identify which) resulting from Underhill’s amortization deduction.