I purchased a Nail salon (business and small equipment, but not the building) on 12/31/24 and took possession on 1/1/25. The purchase price was $9,000 higher than the equipment and supplies purchased. This was consideration for the client list as well as the benefit of the great reputation of the prior business. I believe I should list the $9,000 as an intangible asset (i.e. goodwill) and then depreciate that. I can't find where to enter this in Turbo Tax Deluxe. Should I just enter it as an asset? When I tried that, I entered the acquisition date as 12/31/24 an the in service date as 1/1/25 and Turbo Tax didn't like that the in service date was 2025. I'm not planning on getting any amortization benefit for this in 2024 but since the purchase happened in 2024, I feel I should list this on my 2024 return. Is the correct approach, and if so, should I just list the in service date as 12/31/24?
Since you took possession of the business in 2025, you will report the purchase on your 2025 tax return. All assets would have an in-service date of 1/1/25.
Even though you paid for the business in 2024, you didn't "open for business" until the next year.