Who is responsible for the capital gains tax on goodwill when disposed of?

The capital gains tax on goodwill, when disposed of, primarily falls on individuals because it is considered personal property for tax purposes. When an individual sells an asset that has appreciated in value, such as goodwill acquired through a business, they are required to report that gain on their personal tax return and pay the relevant capital gains tax.

Goodwill can appear on the financial statements of both companies and individuals, but for tax purposes, individuals may directly capture and report gains realized from the sale of their personal business goodwill. This responsibility to report and pay taxes on capital gains generally resides with individuals who sell their personal interests or goodwill that have appreciated in value over time.

In the case of companies, capital gains tax would typically be reported and paid as part of the corporate tax structure rather than specifically tagged to the sale of goodwill by the individual owners. Therefore, while companies indeed deal with capital gains tax implications, the cornerstone responsibility for capital gains tax on the disposal of goodwill directly pertains to individuals in such transactions.