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When purchasing a business that is a partnership or limited liability company (LLC), the following approach can produce benefits for the buyer. Often when a business is purchased, the buyer pays not only for the fair market value of assets received, but also for goodwill.
The use of a Sec. 754 election to step up assets in a partnership under Secs. 734 and 743 can create basis in Sec. 197 intangible assets that can then be amortized.
Although Sec. 197(e)(1)(A) specifically excludes corporate stock and partnership interests from being considered "Sec. 197 intangibles," Temp. Regs. Sec. 1.197-1T(b)(8) allows any increase in the basis of partnership...