How is the $15 million in goodwill treated under US tax law for an asset acquisition?

Goodwill in an asset acquisition is treated as an intangible asset under U.S. tax law and must be amortized over a 15-year period using the straight-line method. This reflects the understanding that goodwill represents a premium paid over the fair value of identifiable net assets, often attributable to factors like brand reputation, customer relationships, or employee skills.

Therefore, the correct approach for the $15 million in goodwill is to deduct it in equal installments over the 15 years, resulting in an annual deduction of $1 million per year. This is consistent with the tax code’s guidelines for the amortization of intangible assets.

The choice situating the deduction at a flat rate yearly does not align with the specific requirement reinstated by U.S. tax law regarding the amortization period for goodwill. Hence, deducting it at either a flat rate or on annual increments not corresponding to this 15-year rule would not comply with the regulations outlined.