In 1996, I bought into an LLC for a business that provides personal services. At that time, there were two other partners who had been running the business prior to that date. On the date I joined, they valued the firm at an amount that included Goodwill, based on our existing client base, and I contributed cash to purchase a share of that firm. Over the years, this Goodwill has been on our balance sheet and has never changed. During this time, we were an LLC, filing a Form 1065
In 2016 I bought out the other two partners, leaving just myself as a sole proprietor LLC. At that time I switched from filing a Form 1065, to filing Schedule C on my form 1040. As a result of their retirement, I had to sell off approximately 50% of the business's client base due to not having the staff to continue servicing all of our clients. Another firm purchased these clients from me and I used that money, along with personal funds, to help buy out the two retiring partners.
My question is this - the Goodwill from the original purchase is still on the books but the business is not worth anywhere near that much any more (due to having a smaller client base since 2016). Should we have been amortizing that Goodwill over the years? Is there a way to catch it up now? Or is there a way I can write-down the Goodwill amount now to remove the 50% that was sold back in 2016?
How would I show this in TurboTax, or does it even affect my taxes?
