Amortization of Intangibles (Portfolio 533)


Annette Nellen


San Jose State University

At a glance

I. General Introduction
II. Amortization Overview
III. Section 197 Intangibles
IV. Intangibles Excluded From or Not Governed by § 197
V. Related Rules and Guidance



Tax Management Portfolio, Amortization of Intangibles, No. 533, describes: (1) the §197 rules on amortizing intangible assets (generally applicable to intangibles acquired after August 10, 1993); and (2) the rules on amortizing intangible assets that are not §197 intangibles.

This Portfolio discusses in depth §197 and its tax planning pitfalls and opportunities. This Portfolio also discusses the situations in which intangible assets are excluded from amortization under §197. Such intangibles may be amortizable under the rules of §167 and the regulations thereunder. Rules provided under §263(a) and the regulations thereunder are also discussed because the need to identify when expenditures create capitalizable intangible assets is crucial to knowing if amortization rules apply. However, the details of the guidance on capitalization are covered in other Portfolios which should be consulted for matters involving whether an expenditure should be capitalized (such as under §263 or §263A) or expensed (such as under §162 or §174).

A discussion of pre-§197 law is included in the Worksheets as taxpayers may have such assets. In addition, the worksheets include a table with examples illustrating the various rules that might apply due to the interaction of the capitalization and amortization provisions.

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