A goodwill that is tax-deductible (in an asset purchase): a purchaser of a target company usually receives a tax benefit related to paying a premium (the goodwill) for this intangible asset. Typically, the buyer of such assets is eligible for a tax deduction through amortization of the goodwill paid over the course of 15-years.
Accounting for a tax goodwill is carried out on a tax basis. In acquisition accounting, goodwill amortization, in some jurisdictions, is deductible for tax purposes, thus giving rise to deferred taxes. If there is a difference between the reported amount of goodwill and the tax-basis goodwill, treatment would depend on whether tax-deductible goodwill is larger or smaller than book goodwill. Generally, if tax-deductible goodwill is larger, a deferred tax asset (DTA) is recognized. In the opposite case, no deferred tax liability (DTL) is recorded for the goodwill basis difference.
In a stock purchase (or stock sale), the premium paid (for goodwill) is made part of the basis of the investment in the stock and would only produce a tax benefit upon disposal of the stock, which may happen in the very far future.
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