Mortgage Amortization Schedule Calculators

Effectively, Section 197 requires that the cost of most customer-based intangible assets, including goodwill and going concern value acquired after Aug. 10, 2003, or electively after July 25, 2001, be capitalized and amortized ratably over a 15-year period beginning with the month of acquisition. In order to utilize mortgage amortization schedule calculators you have to return depreciable, such assets must have been acquired, or treated as being acquired under a Section 338 election, and held in connection with a trade or business, or with an activity engaged in for the production of income.

This provision is more extensive than the decision in Newark Morning Ledger, which permitted a depreciation deduction for customer-based intangibles, not including goodwill or going concern value, if the taxpayer is able to prove that the asset can be valued and that it has a limited useful life.

Section 197 did not make any changes to the tax treatment of self-created intangibles such as goodwill created through advertising. For this purpose, a self-created intangible includes such intangibles produced for the taxpayer by another person under a contract with the taxpayer that is entered into prior to the production of the intangible. In effect, the exclusion of self-created intangibles from the capitalization and amortization requirements of Section 197 does not alter the historical view that the costs of creating intangibles are generally ordinary and necessary business expenses deductible under Section 162(a).

Section 197 Asset or Not?

All "Section 197" intangibles are eligible for depreciation. Any intangible falling within the following six categories is a Section 197 intangible:

* Goodwill

* Going concern value Category C intangibles

* Government-granted rights

* Covenants not-to-compete

* Franchises, trademarks and trade names

Each of these categories is specifically defined. According to the Conference Report, for Section 197 purposes, goodwill is the value of the trade or business attributable to the expectancy of continued customer patronage, due to name, reputation or any other factor. The going concern value of a trade or business is the value that attaches to property due to its existence as an integral part of a going concern. This includes the value attributable to the ability of a trade or business to continue to function and generate income without interruption notwithstanding the change of ownership.

Category C intangibles is a broad base encompassing value generated by the work force, information base, know-how, suppliers, customers, or other similar property. The value of intangible property pertaining to the work force is generated by such factors as the experience, education and training of the work force; the terms and conditions of employment, whether contractual or otherwise; and any other value placed on employees or any of their attributes. The information base includes business books and records, operating systems, and any other information base including lists or other information with respect to current or prospective customers.

Know-how has been defined to include any patent, copyright, formula, process, design, pattern, format, or other similar item. Included in the definition of supplier-based intangibles is any value resulting from the future acquisitions of goods or services pursuant to relationships, whether or not contractual, in the ordinary course of business with suppliers of goods or services to be used or sold by the taxpayer. Customer-based intangibles consist of market, market share, and any other value resulting from the future provision of goods or services due to relationships, whether or not contractual, in the ordinary course of business with customers.