How Long Is Goodwill Amortized: 15 Years, 10 Years, or Never

How long goodwill is amortized depends on which set of rules you’re applying. Under US GAAP, public companies do not amortize goodwill at all — they carry it on the balance sheet indefinitely and test it for impairment each year. Private companies and not-for-profit organizations can elect to amortize goodwill straight-line over a maximum of 10 years. For federal income tax purposes, Internal Revenue Code Section 197 requires goodwill to be amortized over exactly 15 years, regardless of what the financial statements show.¹

Which timeline applies to you depends on the entity type, whether you’re looking at the books or the tax return, and, for tax, how the acquisition was structured.

15 Years for Federal Tax Purposes

The IRS treats goodwill as a Section 197 intangible. It must be amortized ratably over a 15-year period beginning in the month of acquisition.¹ The schedule is fixed. You can’t accelerate it if the acquired business is failing, and strong performance doesn’t extend it.

There is an important precondition, though: whether you get to amortize goodwill for tax purposes at all depends on the deal structure.

In an asset purchase, the buyer establishes a new tax basis in the acquired assets, including goodwill, and starts the 15-year clock immediately.
In a standard stock purchase, the buyer inherits the target’s existing tax basis with no step-up, so there is no new goodwill to amortize.
If the parties make a joint election under Section 338(h)(10) or Section 336(e), a stock sale is treated as an asset sale for tax purposes, giving the buyer a stepped-up basis and unlocking the 15-year deduction.¹

That structural choice is one of the most consequential tax decisions in any acquisition, because it controls whether a 15-year stream of deductions exists at all.

Up to 10 Years for Private Companies and Nonprofits

Private companies gained an alternative in 2014 through ASU 2014-02. Under this election, a private company amortizes each unit of goodwill straight-line over 10 years, or a shorter period if management can demonstrate the economic benefits will be consumed sooner. The useful life can be revised downward if circumstances change, but the cumulative amortization period for any single unit of goodwill can never exceed 10 years.²

FASB extended the same option to not-for-profit entities in 2019 through ASU 2019-06, on identical terms: straight-line over the lesser of 10 years or the demonstrated useful life.³ Not-for-profits that elect the alternative also absorb certain identifiable intangible assets, such as customer-related intangibles and noncompete agreements, into the goodwill balance rather than recognizing them separately.

The practical draw is cost. A full quantitative impairment test requires estimating the fair value of an entire reporting unit, often with outside valuation experts and discounted cash flow models. A predictable annual amortization expense removes most of that work. Entities that elect the alternative no longer perform an annual impairment test; they only test when a triggering event suggests the fair value of the entity or reporting unit may have fallen below its carrying amount. Under ASU 2021-03, they can evaluate triggering events at the end of each reporting period rather than monitoring continuously.⁴

Two constraints matter before you elect:

The election is irrevocable. Once a private company or nonprofit opts into amortization, it cannot switch back to the impairment-only model.
The election applies to all existing and future goodwill. You can’t cherry-pick individual acquisitions.

Public Companies: No Amortization at All

For public companies under US GAAP, the answer to “how long” is that there is no amortization period. Goodwill sits on the balance sheet at its original cost and is tested for impairment at least once a year, and again whenever a triggering event suggests fair value may have fallen below carrying amount. This has been the rule since 2001, when FASB replaced the old approach of amortizing goodwill over up to 40 years with an impairment-only model, now codified in ASC Topic 350.⁵

The reasoning was that goodwill doesn’t wear out on a predictable schedule. A brand might hold its value for decades or collapse after a scandal, so spreading the cost evenly over an arbitrary period didn’t reflect economic reality. Under the current model, earnings stay clean until an impairment event, at which point the charge can be large. Once recorded, an impairment loss is permanent — the goodwill balance cannot be written back up in later periods.

Companies reporting under IFRS follow a similar impairment-only approach under IAS 36; goodwill is not amortized there either.⁶

The Book-Tax Gap the Different Timelines Create

Because the tax rule and the accounting rule almost never match, most acquirers carry two different goodwill numbers at once.

A public company keeps goodwill at its original cost on its GAAP balance sheet, reduced only if an impairment charge is recorded, while simultaneously deducting one-fifteenth of that cost each year on its federal tax return. The mismatch generates a deferred tax liability that unwinds over the 15-year amortization period, unless a GAAP impairment charge narrows or reverses the gap.

A private company that elects the 10-year amortization alternative has a smaller but still real mismatch: book amortization runs on a shorter schedule than the 15-year tax life, so the two expense streams don’t line up year by year even though both eventually reach zero.

A private company that has not made the election sits in the same position as a public company for this purpose — no book amortization, 15-year tax amortization, deferred tax liability building each year.

What Could Change for Public Companies

FASB has been considering a return to amortization for public companies. In late 2020, the Board tentatively decided to reintroduce goodwill amortization with a default period of 10 years on a straight-line basis, with the option for management to justify a different period on a deal-by-deal basis. The Board has continued deliberating, and as of mid-2025 the project remains on FASB’s active agenda with no final standard issued.

If FASB finalizes the change, it would be the most significant shift in goodwill accounting in over two decades and would effectively align public company treatment with what private companies can already elect. For now, the three answers stand: zero years for public companies under GAAP, up to 10 years for private companies and nonprofits that elect the alternative, and 15 years on the federal tax return whenever the deal structure gives the buyer a stepped-up basis in the acquired assets.

1
Office of the Law Revision Counsel. 26 USC 197 – Amortization of Goodwill and Certain Other Intangibles
2
Financial Accounting Standards Board. Accounting Standards Update 2014-02 – Intangibles, Goodwill and Other (Topic 350): Accounting for Goodwill
3
Financial Accounting Standards Board. Accounting Standards Update 2019-06 – Extending the Private Company Accounting Alternatives on Goodwill and Certain Identifiable Intangible Assets to Not-for-Profit Entities
4
Financial Accounting Standards Board. Accounting Standards Update 2021-03 – Intangibles, Goodwill and Other (Topic 350)
5
Financial Accounting Standards Board. Accounting Standards Update 2017-04 – Intangibles, Goodwill and Other (Topic 350)
6
IFRS Foundation. IAS 36 Impairment of Assets