Which of the following intangible assets is amortizable over 15 years under IRC §197?

Answer options:

Goodwill acquired in the purchase of a trade or business.

Self-created goodwill.

A patent created by the taxpayer, not acquired in a business combination.

Organizational costs of a corporation.

How to approach this question

Section 197 applies to ACQUIRED intangibles (Goodwill, Customer Lists, Covenants not to compete).

Full Answer

A.Goodwill acquired in the purchase of a trade or business.✓ Correct

IRC §197 allows for the 15-year straight-line amortization of specific intangible assets acquired in connection with the acquisition of a trade or business, such as goodwill, going concern value, and covenants not to compete. Self-created goodwill is not amortizable.

Common mistakes

Thinking self-created goodwill can be amortized.

Question 21 All questions Question 23

Practice the full CPA REG Practice Exam 5

72 questions · hints · full answers · grading

More questions from this exam

Q01A CPA is representing a client, TechSolutions Inc., in an IRS examination regarding a large resea...Hard Q02A tax return preparer is engaged to prepare a return for a client who has engaged in a transactio...Hard Q03Which of the following statements accurately describes the disciplinary authority of a State Boar...Hard Q04A taxpayer filed their Year 1 individual income tax return on March 15, Year 2. The return showed...Hard Q05A taxpayer disagrees with a proposed IRS deficiency and wishes to litigate the matter. The taxpay...Hard

View all 72 questions →