I recently retired and sold my dental practice. At the closing the broker allocated the Purchase Price as follows:
Equipment, Furniture/Fixtures, Supplies, Personal Goodwill, Non-Compete/Non-Solicitation Covenants, Accounts Receivables, Consulting Agreement
For each item, I need to determine both whether it is ordinary income (<1 year) or long term capital gain. I also need to decide which "Asset Class" they fall under.
My best guesses are:
Equipment, Furniture/Fixtures = Income, Class V
Supplies = Income, Class V
Personal goodwill = LTCG, Class VII
Non-compete/Non-Solicitation Covenants = Income, Class VI
Accounts Receivables = Income, Class III
Consulting Agreement = LTCG, Class VII
Can anyone verify this or tell me what is correct? I have looked at the instructions every day for more than a week, called the broker, asked a CPA, and tried to contact the IRS, but cannot get a clear, consistent answer.
