Taxation of knowledge

Article Abstract:

The increased importance of intangible intellectual property in the economy has resulted in reduced state tax revenues and increased complexity in federal amortization rules. Most state sales tax schemes are designed to tax sales of goods. Though many state personal property tax systems cover intangible property, these laws often go unenforced. Income taxation has been challenged less by this shift in the economy, but amortization rules have had to be revised. IRC section 197 was enacted to resolve amortization disputes, but complexity has returned with the establishment of exceptions.

Sales tax, State taxation, states

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Regulatory developments on the treatment of intangibles

Article Abstract:

Proposed regulations under IRC section 197 identify when the section's amortization provisions are applicable and what types of property are covered. Intangible property covered by section 197 includes goodwill and going concern value, and a 15-year amortization period is employed. The regulations identify assets not covered and detail how to compute the amortization deductions. Separate regulations have been issued that focus on the tax treatment of intangible property received pursuant to the acquisition of a trade or business.

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Intangible assets - the Treasury issues new regulations

Article Abstract:

The IRS has issued proposed regulations under IRC section 197 that identify how intangible property should be amortized. The regulations list property, such as goodwill and going concern value, that is subject to the 15-year amortization provisions of section 197. The regulations also note that self-created and churned intangibles are not generally amortized under section 197. Regulations under sections 338, 1060 and 167 clarify the amortization of acquired assets and assets not covered by section 197.

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