Goodwill is the value of a business based on expected continued customer patronage due to its name, reputation, or any other factor. In the sale of a business, goodwill is the amount left over after all the other assets have been valued.1
If you are buying a business, you want goodwill to be a relatively low number because you can't depreciate goodwill, whereas you can depreciate most using accelerated rates under the Modified Accelerated Cost Recovery System (MACRS). (See .) However, you can amortize the acquired goodwill over a 15-year period.2 (See .)
1 IRC Section 1060.
2 IRC Section 197(a), (d).