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| | {{ForumReplyPost|UserID=Gmikeg|Date=9 December 2007|Text=This applies to Start-Up costs only: Before 10/23/04: $5000 the first year, then 60 months. I don't know when the first year was, let me know.}} | | {{ForumReplyPost|UserID=Gmikeg|Date=9 December 2007|Text=This applies to Start-Up costs only: Before 10/23/04: $5000 the first year, then 60 months. I don't know when the first year was, let me know.}} |
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| | + | {{ForumReplyPost|UserID=Gmikeg|Date=9 December 2007|Text=Right now, and since 1994, intangibles including goodwill, going concern value, and noncompete covenants are covered by Sec. 197 - 180-month. Start-up and organizational expenses are not governed by 197, because they are not assets, but are expenses chargeable to a capital account, and can be expensed under 195, within limits like the pre-October 2004 $5000/60-month rule. Logically, if your 60-month S/U and Org. expenses were 60 months old in 2004, then write them off in '04, you're in the old-realm of Sec. 195. If the license has to be renewed past '04, then the 180-month rule applies.}} |
Revision as of 16:34, 9 December 2007
Discussion Forum Index --> Basic Tax Questions --> License or franchise agreement
Discussion Forum Index --> Tax Questions --> License or franchise agreement
Nshnider (talk|edits) said:
| 9 December 2007
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| If the license or franchise agreement is for a limited time period such as 5 years do you sitll have to amortize the cost over 180 months???
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Gmikeg (talk|edits) said:
| 9 December 2007
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| I got up too early, but, I read Sec. 197(d)(1)(F), Franchise licences and their renewals ARE governed by Sec. 197 . However, isn't there some election (wow, real tired), to expense 197 stuff up to $5K the first year (with limits), then write the rest off over 5 years? Or is my lucid fantasy just for start-up costs? Anyone? ZZZZZZZZZZZZZZZZZZZZZZZZ
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Nshnider (talk|edits) said:
| 9 December 2007
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| the 5 year deal ended in 2004 and it was for organization and start up costs. My question deals with buying a franchise or license agreement or paying for a non compete clause for 5 years do I still have to amortize them over 180 months even though they will expire in 60 months
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Gmikeg (talk|edits) said:
| 9 December 2007
|
| This applies to Start-Up costs only: Before 10/23/04: $5000 the first year, then 60 months. I don't know when the first year was, let me know.
|
Gmikeg (talk|edits) said:
| 9 December 2007
|
| Right now, and since 1994, intangibles including goodwill, going concern value, and noncompete covenants are covered by Sec. 197 - 180-month. Start-up and organizational expenses are not governed by 197, because they are not assets, but are expenses chargeable to a capital account, and can be expensed under 195, within limits like the pre-October 2004 $5000/60-month rule. Logically, if your 60-month S/U and Org. expenses were 60 months old in 2004, then write them off in '04, you're in the old-realm of Sec. 195. If the license has to be renewed past '04, then the 180-month rule applies.
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