On November 13, Underhill Incorporated, a calendar year taxpayer, purchased a business for a $962,900 lump-sum price. The business’s balance sheet assets had the following appraised FMV:
Accounts receivable $ 51,500
Inventory 191,000
Tangible personality 625,000
$ 867,500
1) What is the cost basis of the goodwill acquired by Underhill on the purchase of this business?
2) Compute Underhill’s goodwill amortization deduction for the year of purchase.
3) Assuming a 21 percent tax rate, compute the deferred tax asset or deferred tax liability (identify which) resulting from Underhill’s amortization deduction.