On 27 July 2007, the Italian tax authorities issued Ruling No. 184 dealing with the deductibility of a deficit (badwill) derived from a transfer of a going concern.
(a) Facts. An Italian NewCo paid a lower price than the net value of the assets received as part of an acquisition of a going concern. This difference represents a deficit (badwill) for the purchaser and is applied to expected losses for the next 3 years. The Italian NewCo posted the badwill in a re…