[REG] Intangible Property

Section 197 Purchased Intangibles

- assets acquired in connection with the purchase of an existing business

- Goodwill, going-concern value, covenant not to compete, Licenses and permits, customer or supplier list, Franchises, trademarks, patents, copyrights

 

Research and Experimental Cost

expensed/capitalized and amortized

 

Patents and Copyrights

- cost of development + legal cost + government fees

- the value of the inventor or author's time is not included in the basis

 

Loan Costs

loan closing costs(ex. loan origination fees) capitalized and amortized

 

Organizational Cost and Start-up cost

immediately expense: the first 5K of business organization cost + 5K of start-up costs

* 5K allowance is reduced when the cost exceeds 50K for each item

* not expensed > capitalized as an intangible asset and amort 15yrs

 

Business organizational cost

- applies to the formation and organization of a partnership, LLC, or corporation

- legal fees, accounting fees, filing fees, costs of organizational meetings

  * cost associated with adding equity to the business

    (issuing and selling stock, partnership interest transferring assets to the corporation or partnership)

 

Business Start-up Costs

Qualifying costs: costs to investigate and create the business that re-incurred before the business begins operation

- investigation of potential mkt, location, products

- marketing and advertising for the opening of the business

- cost to secure prospective distributors, suppliers, or customers

- worker hiring and traning costs

- Facility and equipment set-up cost