Goodwill - not a sale

[Strongsilence-CPA]

The S corporation began in 2019 when the owner, an individual, bought a business. There was purchased goodwill in this purchase in 2019. The corporation had no sales after 7/1/2022 as the owner had medical issues and could not operate the business. The corporation dissolved formally with the Secretary of State in January 2023. The corporation was not sold prior to 1/1/2023 and likely will not be sold.  There are some assets remaining. Is the corporation permitted to write off goodwill in 2022 for IRS tax purposes?

[sjrcpa]

What happened to the other assets that were in the corporation?

[Strongsilence-CPA]

Thank you for asking.  They were taken out of service.  Machinery/equipment that sat idle in storage.

[Strongsilence-CPA]

CCH has little guidance on point. From what I have read an impairment (GAAP term) or write off depends on the facts and circumstances.  The facts seem to support a write off in 2022 because of the retirement of the assets, the lack of paying liabilities in the 2nd half of 2022, and the inattention to business by the shareholder.

[TaxGuyBill]

For all assets, including Goodwill, I think you need to determine if they were 'abandoned' or if they were transferred to the shareholder.

It sounds like the physical assets may have been transferred to the shareholder (part of the final distribution).   But you'll need to determine what 'happened' to the Goodwill.