Accountant-Man
Level 12

The seller isn't selling an asset called "goodwill,"(unless she had previously purchased assets including GW), she is selling assets for more money than her adjusted basis in the assets. The amount of the sales price that is more than the FMV of those assets is the "goodwill." Although there could be customer list, too.

On the books of the seller is the sale of all assets less adjusted basis. Since most is GW, most of the gain will be capital gain. On the 8594 is the FMV of the other assets and the GW. On the 4797 goes the sale of the other assets, (possibly getting depreciation recapture, which is ordinary income), and the GW goes on Schedule D.

** I'm still a champion... of the world! Even without The Lounge.