Amortization of intangible assets in a business acquisition
Article Abstract:
Major tax questions emerge for a purchaser when the assets of an existing business are bought in an asset acquisition. One of the most controversial issues has been how to distribute the total purchase price among the many acquired assets. The purchase price allocated to such intangibles as goodwill and going concern value is a particularly contentious subject. To address this issue, Congress introduced 1060 in 1986 which describes a method for allocating purchase price among the assets acquired. Later on, Sec 197 was added to resolve the disagreement on allocations to acquired intangibles. This section prescribes a 15-year recovery timeframe for all 'amortizable intangible assets.' Unfortunately, these aforementioned statutes cannot adequately deal with the problem because they do not address its root cause.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1997
User Contributions:
Comment about this article or add new information about this topic:
Establishing a useful life is the key to an amortization deduction for intangibles
Article Abstract:
Intangible property is amortized in much the same way that tangible property is depreciated; therefore, amortization schedules reflect the loss of value associated with the passage of time. The rules for amortizing intangible assets are discussed in terms of start-up costs, organizational expenditures, construction period costs, patents and copyrights (as intangibles), trademarks and licenses (as intangibles), asset transfers, customer lists and area rights (as intangibles) and non-competition agreements. To qualify for amortization, intangible assets must: have useful lives that exceed a year in length, be separable from goodwill, and have determinable values. Most often, amortization is computed using straight-line methods of accounting.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1986
User Contributions:
Comment about this article or add new information about this topic:
How to establish a limited useful life in order to amortize purchased intangibles
Article Abstract:
Intangible assets (such as goodwill) that are acquired as corporations are taken over should be isolated and identified. With different tax planning techniques available, both amortizable and nonamortizable intangibles may be valued. Also, the books of the firm that is acquired should be evaluated to determine whether a useful life with limited duration can be assigned to the intangible assets acquired. Amortization scheduling and taxation of intangible assets are explained from a tax planning standpoint.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1986
User Contributions:
Comment about this article or add new information about this topic:
- Abstracts: Information technology: re-engineering your business systems. Manufacturing: Competitive edge or corporate millstone?
- Abstracts: Tax harmonisation - a recipe for chaos. Act now for UK business and abolish act. International tax
- Abstracts: Chartered accountants mean business. So you want to be an MBA? A down-to-earth president
- Abstracts: Auditing functions for internal control systems with interdependent documents and channels. A simulation analysis of the power characteristics of some popular estimators under different risk and materiality levels
- Abstracts: Detroit media monitors speak out. In automotive print - the rage is multi pages