ExpertHard1 markMultiple Choice
CPA · Question 22 · Area III: Property Transactions
Which of the following intangible assets is amortizable over 15 years under IRC §197?
Which of the following intangible assets is amortizable over 15 years under IRC §197?
Answer options:
A.
Goodwill acquired in the purchase of a trade or business.
B.
Self-created goodwill.
C.
A patent created by the taxpayer, not acquired in a business combination.
D.
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.
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