197 Intangibles: A Case Study

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Chapter 8: Date placed in service (see concept summary 8.1 in the text). The applicable system of depreciation or cost recovery is dependent on the date the property is placed in service. The small business jobs act of 2010 extended 50% additional first-year depreciation for qualified property acquired and placed in service before january 1, 2011. The tax relief act of 2010 extended additional first-year depreciation for qualified property acquired and placed in service before january 1, 2013. The percentage is 100% for property placed in service after september 8, 2010 and before january 1, 2012. Under the american taxpayer relief act of 2012, 50% additional first-year depreciation may be taken on property placed in service in 2012 and…show more content…
Section 197 intangibles are amortized ratably over a 15-year period beginning in the month the intangible is acquired. Definition. Intangibles under § 197 include the following acquired after august 10, 1993:examples include: goodwill, going concern value, franchises, trademarks, and trade names.other intangibles if they are acquired in connection with the acquisition of a business.convenants not to compete.copyrights.patents. Self-created intangibles. Generally self-created intangibles are not § 197 intangibles. Amortization period. The 15-year amortization period applies regardless of the actual useful life of the intangible. Amortizable § 195 startup expenditures. The expenditures are amortizable if an election is made. If no election is made, the expenditures must be capitalized.treatment. A deduction of the lesser of, the amount of the expenditures, or $5,000 reduced by the amount by which the expenditures exceed $50,000.any amount not deducted is amortized over a 180-month period beginning in the month the business begins.requirements.the expenditures are in connection with one of the following:the creation of an active trade or business.the investigation of the creation or acquisition of an active trade or business. Any activity engaged in for profit in anticipation of such activity becoming an active trade or business. The costs must be the same as would be currently deductible if incurred in connection with an existing business in the same field as entered into by the

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