Amortization Of Intangibles

AAA

DEFINITION of 'Amortization Of Intangibles'

A tax term relating to the practice of deducting the cost of an investment in a qualifying non-tangible asset over the projected life of the asset. The cost basis of the qualifying intangible asset is amortized over a 15-year period, irrespective of the actual useful life of the asset.

In the year the asset is acquired and sold, the amount of amortization deductible for tax purposes is prorated on a monthly basis. Intangible amortization is reported on Form 4562.

INVESTOPEDIA EXPLAINS 'Amortization Of Intangibles'

Intangible assets are typically nonphysical in nature and not easily assigned a value. According to Section 197 of the Internal Revenue Code, there are numerous qualifying intangible assets, but the most common are goodwill, the value of a worker's knowledge, trademarks, trade and franchise names, noncompetitive agreements related to business acquisitions and a company's human capital.

RELATED TERMS
  1. Amortization

    1. The paying off of debt in regular installments over a period ...
  2. Goodwill

    An account that can be found in the assets portion of a company's ...
  3. Cost Basis

    1. The original value of an asset for tax purposes (usually the ...
  4. Intangible Asset

    An asset that is not physical in nature. Corporate intellectual ...
  5. Deduction

    Any item or expenditure subtracted from gross income to reduce ...
  6. Book Value Reduction

    Reducing the value at which an asset is carried on the books ...
Related Articles
  1. Can You Count On Goodwill?
    Personal Finance

    Can You Count On Goodwill?

  2. Intangible Assets Provide Real Value ...
    Markets

    Intangible Assets Provide Real Value ...

  3. Accretion / Dilution Analysis: A Merger ...
    Fundamental Analysis

    Accretion / Dilution Analysis: A Merger ...

  4. What is the difference between amortization ...
    Investing

    What is the difference between amortization ...

comments powered by Disqus
Hot Definitions
  1. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  2. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  3. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  4. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  5. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
  6. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
Trading Center