Broken Deal Fee Tax Treatment
November 24, 2023
by an investor from Florida State University in Atlanta, GA, USA
My company was looking into buying another smaller company in the same industry. We issued an LOI and paid for a quality of earnings. The quality of earnings reveled something that made us not go through with the deal. What is the tax treatment of the quality of earnings fees? Am I allowed to deduct them immediately or do I have to capitalize and amortize them? This is for US federal tax purposes.