INTRODUCTION
A sale of a business to a buyer often involves an element of
goodwill, a term that can have different meanings in different
contexts, depending on whether the term relates to (i) purchase
price allocations for financial statement purposes or income tax
purposes or (ii) attempting to compute the source of income for
foreign tax credit purposes. Compounding the definitional
inconsistency, the meaning of the term has changed over time.
The Merriam-Webster Dictionary defines goodwill in a
non-business context as "a kind, helpful, or friendly feeling
or attitude." In a business context, the term is given various
definitions, including
- the amount of value that a company's good reputation adds
to its overall value,
