Question

Which of the following is not correct with regard to IRC 197 intangibles? Amortization is subject...

Which of the following is not correct with regard to IRC 197 intangibles?

Amortization is subject to recapture as IRC 1245 property upon a taxable disposition.

The use of any recovery method other than straight line is not allowed.

The cost is amortizable over 15 years.

Amortization begins in the month of acquisition.

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Answer #1

The amount of amortization deduction allowed to taxpayers with respect to IRC 197 intangibles shall be determined by amortizing the adjusted basis of such intangible ratably over 15 years period beginning with the month of acquisition. The use of any other recovery method except as mentioned above is not allowed.

If there is a disposition of section 197 intangibles then no loss shall be recognized on such disposition and appropriate adjustments to adjusted basis of such retained intangibles shall be made for loss not recognized above.

Therefore all the statements mentioned with regard to IRC 197 intangibles are correct except a) (i.e. Amortization is subject to recapture as IRC 1245 property upon a taxable disposition) (this statement is not correct).

Hence the required answer is a) Amortization is subject to recapture as IRC 1245 property upon a taxable disposition.

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