Can I Deduct the Purchase Price of My Business?

When you buy an existing business, you generally can't deduct the full purchase price immediately — most assets must be depreciated or amortized over time. Tangible assets like equipment are depreciated over their useful lives (accelerated with Section 179 or bonus depreciation). Intangible assets like goodwill and customer lists are amortized over 15 years under Section 197. How you allocate the purchase price among different asset classes affects how quickly you can deduct it — this is negotiated as part of the deal and reported on Form 8594. Structuring the deal as an asset purchase (rather than stock purchase) often gives buyers more favorable tax treatment.