The notion of goodwill has existed since mankind first entered into commercial activity. In ancient Egyptian bazaars, merchants knew the location closest to the city gates would provide
the best opportunity to sell goods. So merchants with the best locations could sell their businesses for a higher price. Location is only one example of why an ongoing business is worth more than the sum total of its property. Other elements might include reputation for good products and service, established customers, profitable history, reliable workforce, etc. Tax courts have held that goodwill represents the price paid for a business in excess of the value of tangible assets. But in some cases, determining the value of goodwill is not cut and dried. For example, in divorce, gift tax, estate tax, and certain casualty loss cases, great differences of opinion will exist as to the value of goodwill.
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