goodwill impairment is not deductible for tax purposes unless you abandon the business
The goodwill you buy may not last. There are many reasons why no matter what you do, the goodwill may become "impaired," so that it's worth less to the business than it was when you bought it. Under standard accounting practice you write down the goodwill in your books to reflect the loss. The IRS, though, has different rules and doesn't let you deduct goodwill except amortization over 15 years as a section 197 intagible. One exception is if you abandon the business in the middle of the tax year. In that case, your basis in the goodwill -- the original value less amortization -- is a write-off. If your corporation bought a company and its goodwill, you must abandon the company completely to get the write-off. As long as you continue operations, the related goodwill can't be written off, even if it's worthless in your own accounts.
also note that the IRS compares buyer and seller's 8594, if they don't agree the IRS has the option of auditing both entities and nothing good comes out of this,
https://www.law.cornell.edu/uscode/text/26/197
another reason the IRS won't allow a write off is that you are suing. which at bestmakes any write off a contigency and the IRS does not allow for loss contigencies.
