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. Best's Capital Adequacy Relativity ...

    A rating of an insurance company’s balance sheet strength. Best’s ...
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 ...

Hot Definitions
  1. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  2. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  3. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  4. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  5. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
  6. Call Risk

    The risk, faced by a holder of a callable bond, that a bond issuer will take advantage of the callable bond feature and redeem ...
Trading Center