CFP

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
comments powered by Disqus
Related Articles
  1. Introduction To Financial Planning Organizations
    Personal Finance

    Introduction To Financial Planning Organizations

  2. Understanding The Sharpe Ratio
    Bonds & Fixed Income

    Understanding The Sharpe Ratio

  3. Identifying And Managing Business Risks
    Entrepreneurship

    Identifying And Managing Business Risks

  4. The Executor's Checklist: 7 Things To ...
    Retirement

    The Executor's Checklist: 7 Things To ...

  5. Unpredictable Event Or Bad Investment?
    Bonds & Fixed Income

    Unpredictable Event Or Bad Investment?

Trading Center