Amortization is a method of deducting certain capital costs over a fixed period of time, similar to straight-line depreciation. Items that can be amortized include the following (along with the section number in the IRC):
- Geological and geophysical expenditures (section 167(h))
- Pollution control facilities (section 169)
- Bond premium (section 171)
- Circulation expenditures (section 173)
- Research and experimental expenditures (section 174)
- The cost of acquiring a lease (section 178)
- Qualified forestation and reforestation costs (section 194)
- Business start-up costs (section 195)
- Certain section 197 intangibles, such as
- 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
- A franchise, trademark, or trade name (including renewals)
- Organizational costs for a corporation (section 248)
- Organizational costs for a partnership (section 709)
- Creative property costs (see Rev. Proc. 2004-36)
See IRS Publication 535 for more discussion of each of these.
If you amortize property, the part you amortize does not qualify for the section 179 expense deduction or for depreciation.
In the individual tax return in TaxSlayer Pro, the property being amortized will be associated with business or rental activity reported on Schedules C, E, or F, or Form 4835.
If you are using the depreciation module, include the property there specifying the depreciation method "Amortization" and indicating how many years.
If you're not using the depreciation module, enter the information directly on Form 4562 in the expenses section for the form or schedule. To access Form 4562, from the Schedule C, E, F, or Form 4835 edit menu select:
- Form 4562
- Amortization - Note that the form only includes space for two new items of property to be added.
Note: This is an article regarding expenses that can be be amortized and where this is entered in TaxSlayer Pro. It is not intended as tax advice.