You must generally amortize over 15 years the capitalized costs of “section 197 Intangibles Assets” you acquired after August 10, 1993. You must amortize these costs if you hold the section 197 Intangibles Assets in connection with your trade or business or in an activity engaged in for the production of income.
Note: You may not be able to amortize section 197 Intangibles Assets acquired in a transaction that did not result in a significant change in ownership or use. Refer to Anti-Churning Rules in Publication 535, Business Expenses.
Intangibles Assets is property that has value but cannot be seen or touched. It includes things such as:
- Going concern value.
- Workforce in place.
- Business books and records, operating systems, or any other information base, including lists or other information concerning current or prospective customers.
- A patent, copyright, formula, process, design, pattern, know-how, format, or similar item.
- A customer-based intangible.
- A supplier-based intangible.
- Any item similar to items (3) through (7).
- A license, permit, or other right granted by a governmental unit or agency (including issuances and renewals).
- A covenant not to compete entered into in connection with the acquisition of an interest in a trade or business.
- Any franchise, trademark, or trade name.
- A contract for the use of, or a term interest in, any item in this list.
Note: You cannot amortize any of the Intangibles Assets listed in items (1) through (8) that you created rather than acquired unless you created them in acquiring assets that make up a trade or business or a substantial part of a trade or business. For a complete discussion of intangibles refer to Chapter 8, Amortization, in Publication 535, Business Expenses.