Amortization is an annual deduction to recover certain costs over a fixed time period, similar to straight-line depreciation. Items that can be amortized include the following:
- Geological and geophysical expenditures (section 167(h))
- Pollution control facilities (section 169)
- Bond premium (section 171)
- Research and experimental expenditures (section 174)
- The cost of acquiring a lease (section 178)
- Qualified forestation and reforestation costs (section 194)
- Optional write-off of certain tax preferences over the period specified in section 59(e)
- Certain section 197 intangibles, such as
- Goodwill
- Going concern value
- Workforce in place
- Business books and records, operating systems, or any other information base
- A patent, copyright, formula, process, design, pattern, know-how, format, or similar item
- A customer-based intangible (for example, composition of market or market share)
- A supplier-based intangible
- A license, permit, or other right granted by a governmental unit
- A covenant not to compete entered into in connection with the acquisition of a business<\li>
- A franchise, trademark, or trade name (including renewals)
- Business start-up costs (section 195)
- Organizational costs for a corporation (section 248)
- Organizational costs for a partnership (section 709)
- Creative property costs
If you amortize property, the part you amortize does not qualify for the section 179 expense deduction or for depreciation.
Amortization can be entered in the tax program by accessing the schedule that it is associated with.
To report amortization on Schedule C, from the Main Menu of the tax return (Form 1040), select:
- Income
- Business Income/Loss (Sch C, 1099-MISC)
- Select the business entry from the list
- Edit
- Expenses
- Depreciation
- Form 4562
- Amortization
To report amortization on Schedule E, from the Main Menu of the tax return (Form 1040), select:
- Income
- Rents, Royalties, Entities (Sch E)
- Rents and Royalties
- Select the entry the amortization is associated with
- Edit
- Depreciation
- Form 4562
- Amortization
To report amortization on Schedule F, from the Main Menu of the tax return (Form 1040), select:
- Income Menu
- Farm Income (Sch F)
- Select the form the amortization is associated with
- Edit
- Expenses
- Depreciation
- Form 4562
- Amortization
Additional Information:
Instructions for Form 4562, Depreciation and Amortization (Including Information on Listed Property)
