CFP

By Investopedia AAA

Basis - Amortization and Accretion

Amortization and Accretion
Amortization is the deduction of capital expenses over a specific period of time and it typically applies to intangible assets such as patents, trademarks, copyrights and franchise licenses. These costs generally fall under the "Section 197 intangible" asset code, which allows them to be amortized (taken as a deduction) over a 15-year period. Because the taxpayer gets a deduction for property depreciation and amortization over the life of the asset, the cost basis must be adjusted downward as well to reflect this.

Accretion is an increase in value by internal growth or acquisitions and mergers. If new property is purchased to increase the productivity, growth or expansion of the business, it would be considered an "addition to the property," which allows the basis of the newly acquired asset to be added to the original cost basis of the original property. Basis of Property Received by Gift and in Nontaxable Transactions

You May Also Like

Related Articles
  1. Trading Strategies

    A Guide Of Option Trading Strategies ...

  2. Trading Strategies

    Why & How To Reevaluate Your Trading ...

  3. Investing

    The Biggest Threats to Netflix

  4. Trading Strategies

    Effective Risk Control With Scaling ...

  5. Chart Advisor

    3 Basic Material Stocks Poised For A ...

Trading Center