Question

Do we report purchase of client accounts as Intangible Asset or Misc. Expense?

Forum|Forum|7 years ago
June 6, 2019
1 reply
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Our landscape company purchased another landscape companys' maintenance accounts. Do I report this as an Intangible Asset or as a one-time Misc. Expense?

TurboTax Self Employed Online

T

TomYoung

Employee

Certainly from a Generally Accepted Accounting Principles standpoint this would be considered the purchase of an intangible asset, and the IRS has a similar concept with specific rules as to what constitutes an intangible and the amortization of same.

This site covers the IRS's rules as to what intangibles are and the amortization: https://taxmap.irs.gov/taxmap/pubs/p535-042.htm

Tom Young

S

SLS05Author

Thank you TomYoung.
The purchase was a small amount, $1660, and we are both sole proprietors. We basically just bought a client list from a older man retiring. We don't want to depreciate it, so that's why I thought maybe it would be considered an expense.
I didn't think it fell in with the Amortizable Assets (goodwill, patents, copyrights, etc). and Other Intangible Assets just has a "warning" about being well versed in depreciation.
Does any of this info change your opinion?