Amortization Of Intangibles


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.

BREAKING DOWN '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.

  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. Deduction

    Any item or expenditure subtracted from gross income to reduce ...
  4. Intangible Asset

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

    1. The original value of an asset for tax purposes (usually the ...
  6. Adjusted Gross Income - AGI

    A measure of income calculated from your gross income and used ...
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