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Where To File Amended 1040x

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Where To File Amended 1040x

Where to file amended 1040x Publication 901 - Introductory Material Table of Contents Future Developments Reminders IntroductionOrdering forms and publications. Where to file amended 1040x Tax questions. Where to file amended 1040x Obtaining copies of treaties. Where to file amended 1040x Useful Items - You may want to see: Future Developments For the latest information about developments related to Publication 901, such as treaties effective after it was published, go to www. Where to file amended 1040x irs. Where to file amended 1040x gov/pub901. Where to file amended 1040x Reminders Disclosure of a treaty-based position that reduces your tax. Where to file amended 1040x  If you take the position that any U. Where to file amended 1040x S. Where to file amended 1040x tax is overruled or otherwise reduced by a U. Where to file amended 1040x S. Where to file amended 1040x treaty (a treaty-based position), you generally must disclose that position on your affected return. Where to file amended 1040x See Application of Treaties, later. Where to file amended 1040x U. Where to file amended 1040x S. Where to file amended 1040x –U. Where to file amended 1040x S. Where to file amended 1040x S. Where to file amended 1040x R. Where to file amended 1040x income tax treaty. Where to file amended 1040x  The U. Where to file amended 1040x S. Where to file amended 1040x –U. Where to file amended 1040x S. Where to file amended 1040x S. Where to file amended 1040x R. Where to file amended 1040x income tax treaty remains in effect for the following members of the Commonwealth of Independent States: Armenia, Azerbaijan, Belarus, Georgia, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, and Uzbekistan. Where to file amended 1040x That treaty will remain in effect until new treaties with these individual countries are negotiated and ratified. Where to file amended 1040x Provisions of the U. Where to file amended 1040x S. Where to file amended 1040x –U. Where to file amended 1040x S. Where to file amended 1040x S. Where to file amended 1040x R. Where to file amended 1040x income tax treaty are discussed in this publication under Commonwealth of Independent States. Where to file amended 1040x U. Where to file amended 1040x S. Where to file amended 1040x –China income tax treaty. Where to file amended 1040x  The U. Where to file amended 1040x S. Where to file amended 1040x –China income tax treaty does not apply to Hong Kong. Where to file amended 1040x Introduction This publication will tell you whether a tax treaty between the United States and a particular country offers a reduced rate of, or possibly a complete exemption from, U. Where to file amended 1040x S. Where to file amended 1040x income tax for residents of that particular country. Where to file amended 1040x Tables in the back of this publication show the countries that have income tax treaties with the United States, the tax rates on different kinds of income, and the kinds of income that are exempt from tax. Where to file amended 1040x You should use this publication only for quick reference. Where to file amended 1040x It is not a complete guide to all provisions of every income tax treaty. Where to file amended 1040x Comments and suggestions. Where to file amended 1040x   We welcome your comments about this publication and your suggestions for future editions. Where to file amended 1040x   You can write to us at the following address: Internal Revenue Service Business Forms and Publications Branch SE:W:CAR:MP:T:B 1111 Constitution Ave. Where to file amended 1040x NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Where to file amended 1040x Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Where to file amended 1040x   You can email us at taxforms@irs. Where to file amended 1040x gov. Where to file amended 1040x Please put “Publications Comment” on the subject line. Where to file amended 1040x You can also send us comments from www. Where to file amended 1040x irs. Where to file amended 1040x gov/formspubs. Where to file amended 1040x Select “Comment on Tax Forms and Publications” under “Information About. Where to file amended 1040x ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Where to file amended 1040x Ordering forms and publications. Where to file amended 1040x   Visit www. Where to file amended 1040x irs. Where to file amended 1040x gov/formspubs to download forms and publications, call 1-800-829-3676, or write to the address below and receive a response within 10 days after your request is received. Where to file amended 1040x Internal Revenue Service 1201 N. Where to file amended 1040x Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Where to file amended 1040x   If you have a tax question, check the information available on IRS. Where to file amended 1040x gov or call 1-800-829-1040. Where to file amended 1040x We cannot answer tax questions sent to either of the above addresses. Where to file amended 1040x Obtaining copies of treaties. Where to file amended 1040x   You can get complete information about treaty provisions from the taxing authority in the country from which you receive income or from the treaty itself. Where to file amended 1040x   You can obtain the text of most of the treaties at www. Where to file amended 1040x irs. Where to file amended 1040x gov/businesses/international. Where to file amended 1040x You can also obtain the text of most of the treaties at the following address: Department of the Treasury Office of Public Correspondence 1500 Pennsylvania Ave. Where to file amended 1040x NW — Rm. Where to file amended 1040x 3419 Washington, D. Where to file amended 1040x C. Where to file amended 1040x 20220 If you have specific questions about a treaty, you can get this information from most Internal Revenue Service offices or from: Internal Revenue Service International Section Philadelphia, PA 19255-0725 Useful Items - You may want to see: Publication 519 U. Where to file amended 1040x S. Where to file amended 1040x Tax Guide for Aliens 597 Information on the United States–Canada Income Tax Treaty Form (and Instructions) 8833 Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b) See How To Get Tax Help near the end of this publication for information about getting these publications and forms. Where to file amended 1040x Prev  Up  Next   Home   More Online Publications
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Where to file amended 1040x 8. Where to file amended 1040x   Amortization Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: How To Deduct Amortization Starting a BusinessBusiness Start-Up Costs Costs of Organizing a Corporation Costs of Organizing a Partnership How To Amortize Getting a Lease Section 197 IntangiblesSection 197 Intangibles Defined Assets That Are Not Section 197 Intangibles Safe Harbor for Creative Property Costs Anti-Churning Rules Incorrect Amount of Amortization Deducted Disposition of Section 197 Intangibles Reforestation Costs Geological and Geophysical Costs Pollution Control FacilitiesNew identifiable treatment facility. Where to file amended 1040x Research and Experimental Costs Optional Write-off of Certain Tax Preferences Introduction Amortization is a method of recovering (deducting) certain capital costs over a fixed period of time. Where to file amended 1040x It is similar to the straight line method of depreciation. Where to file amended 1040x The various amortizable costs covered in this chapter are included in the list below. Where to file amended 1040x However, this chapter does not discuss amortization of bond premium. Where to file amended 1040x For information on that topic, see chapter 3 of Publication 550, Investment Income and Expenses. Where to file amended 1040x Topics - This chapter discusses: Deducting amortization Amortizing costs of starting a business Amortizing costs of getting a lease Amortizing costs of section 197 intangibles Amortizing reforestation costs Amortizing costs of geological and geophysical costs Amortizing costs of pollution control facilities Amortizing costs of research and experimentation Amortizing costs of certain tax preferences Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets 550 Investment Income and Expenses 946 How To Depreciate Property Form (and Instructions) 4562 Depreciation and Amortization 4626 Alternative Minimum Tax—Corporations 6251 Alternative Minimum Tax—Individuals See chapter 12 for information about getting publications and forms. Where to file amended 1040x How To Deduct Amortization To deduct amortization that begins during the current tax year, complete Part VI of Form 4562 and attach it to your income tax return. Where to file amended 1040x To report amortization from previous years, in addition to amortization that begins in the current year, list on Form 4562 each item separately. Where to file amended 1040x For example, in 2012, you began to amortize a lease. Where to file amended 1040x In 2013, you began to amortize a second lease. Where to file amended 1040x Report amortization from the new lease on line 42 of your 2013 Form 4562. Where to file amended 1040x Report amortization from the 2012 lease on line 43 of your 2013 Form 4562. Where to file amended 1040x If you do not have any new amortizable expenses for the current year, you are not required to complete Form 4562 (unless you are claiming depreciation). Where to file amended 1040x Report the current year's deduction for amortization that began in a prior year directly on the “Other deduction” or “Other expense line” of your return. Where to file amended 1040x Starting a Business When you start a business, treat all eligible costs you incur before you begin operating the business as capital expenditures which are part of your basis in the business. Where to file amended 1040x Generally, you recover costs for particular assets through depreciation deductions. Where to file amended 1040x However, you generally cannot recover other costs until you sell the business or otherwise go out of business. Where to file amended 1040x For a discussion on how to treat these costs, see If your attempt to go into business is unsuccessful under Capital Expenses in chapter 1. Where to file amended 1040x For costs paid or incurred after September 8, 2008, you can deduct a limited amount of start-up and organizational costs. Where to file amended 1040x The costs that are not deducted currently can be amortized ratably over a 180-month period. Where to file amended 1040x The amortization period starts with the month you begin operating your active trade or business. Where to file amended 1040x You are not required to attach a statement to make this election. Where to file amended 1040x You can choose to forgo this election by affirmatively electing to capitalize your start-up costs on your income tax return filed by the due date (including extensions) for the tax year in which the active trade or business begins. Where to file amended 1040x Once made, the election to either amortize or capitalize start-up costs is irrevocable and applies to all start-up costs that are related to your trade or business. Where to file amended 1040x See Regulations sections 1. Where to file amended 1040x 195-1, 1. Where to file amended 1040x 248-1, and 1. Where to file amended 1040x 709-1. Where to file amended 1040x For costs paid or incurred after October 22, 2004, and before September 9, 2008, you can elect to deduct a limited amount of business start-up and organizational costs in the year your active trade or business begins. Where to file amended 1040x Any costs not deducted can be amortized ratably over a 180-month period, beginning with the month you begin business. Where to file amended 1040x If the election is made, you must attach any statement required by Regulations sections 1. Where to file amended 1040x 195-1(b), 1. Where to file amended 1040x 248-1(c), and 1. Where to file amended 1040x 709-1(c), as in effect before September 9, 2008. Where to file amended 1040x Note. Where to file amended 1040x You can apply the provisions of Regulations sections 1. Where to file amended 1040x 195-1, 1. Where to file amended 1040x 248-1, and 1. Where to file amended 1040x 709-1 to all business start-up and organizational costs paid or incurred after October 22, 2004, provided the period of limitations on assessment has not expired for the year of the election. Where to file amended 1040x Otherwise, the provisions under Regulations sections 1. Where to file amended 1040x 195-1(b), 1. Where to file amended 1040x 248-1(c), and 1. Where to file amended 1040x 709-1(c), as in effect before September 9, 2008, will apply. Where to file amended 1040x For costs paid or incurred before October 23, 2004, you can elect to amortize business start-up and organization costs over an amortization period of 60 months or more. Where to file amended 1040x See How To Make the Election , later. Where to file amended 1040x The cost must qualify as one of the following. Where to file amended 1040x A business start-up cost. Where to file amended 1040x An organizational cost for a corporation. Where to file amended 1040x An organizational cost for a partnership. Where to file amended 1040x Business Start-Up Costs Start-up costs are amounts paid or incurred for: (a) creating an active trade or business; or (b) investigating the creation or acquisition of an active trade or business. Where to file amended 1040x Start-up costs include amounts paid or incurred in connection with an existing activity engaged in for profit; and for the production of income in anticipation of the activity becoming an active trade or business. Where to file amended 1040x Qualifying costs. Where to file amended 1040x   A start-up cost is amortizable if it meets both of the following tests. Where to file amended 1040x It is a cost you could deduct if you paid or incurred it to operate an existing active trade or business (in the same field as the one you entered into). Where to file amended 1040x It is a cost you pay or incur before the day your active trade or business begins. Where to file amended 1040x   Start-up costs include amounts paid for the following: An analysis or survey of potential markets, products, labor supply, transportation facilities, etc. Where to file amended 1040x Advertisements for the opening of the business. Where to file amended 1040x Salaries and wages for employees who are being trained and their instructors. Where to file amended 1040x Travel and other necessary costs for securing prospective distributors, suppliers, or customers. Where to file amended 1040x Salaries and fees for executives and consultants, or for similar professional services. Where to file amended 1040x Nonqualifying costs. Where to file amended 1040x   Start-up costs do not include deductible interest, taxes, or research and experimental costs. Where to file amended 1040x See Research and Experimental Costs , later. Where to file amended 1040x Purchasing an active trade or business. Where to file amended 1040x   Amortizable start-up costs for purchasing an active trade or business include only investigative costs incurred in the course of a general search for or preliminary investigation of the business. Where to file amended 1040x These are costs that help you decide whether to purchase a business. Where to file amended 1040x Costs you incur in an attempt to purchase a specific business are capital expenses that you cannot amortize. Where to file amended 1040x Example. Where to file amended 1040x On June 1st, you hired an accounting firm and a law firm to assist you in the potential purchase of XYZ, Inc. Where to file amended 1040x They researched XYZ's industry and analyzed the financial projections of XYZ, Inc. Where to file amended 1040x In September, the law firm prepared and submitted a letter of intent to XYZ, Inc. Where to file amended 1040x The letter stated that a binding commitment would result only after a purchase agreement was signed. Where to file amended 1040x The law firm and accounting firm continued to provide services including a review of XYZ's books and records and the preparation of a purchase agreement. Where to file amended 1040x On October 22nd, you signed a purchase agreement with XYZ, Inc. Where to file amended 1040x All amounts paid or incurred to investigate the business before October 22nd are amortizable investigative costs. Where to file amended 1040x Amounts paid on or after that date relate to the attempt to purchase the business and therefore must be capitalized. Where to file amended 1040x Disposition of business. Where to file amended 1040x   If you completely dispose of your business before the end of the amortization period, you can deduct any remaining deferred start-up costs. Where to file amended 1040x However, you can deduct these deferred start-up costs only to the extent they qualify as a loss from a business. Where to file amended 1040x Costs of Organizing a Corporation Amounts paid to organize a corporation are the direct costs of creating the corporation. Where to file amended 1040x Qualifying costs. Where to file amended 1040x   To qualify as an organizational cost, it must be: For the creation of the corporation, Chargeable to a capital account (see chapter 1), Amortized over the life of the corporation if the corporation had a fixed life, and Incurred before the end of the first tax year in which the corporation is in business. Where to file amended 1040x   A corporation using the cash method of accounting can amortize organizational costs incurred within the first tax year, even if it does not pay them in that year. Where to file amended 1040x   Examples of organizational costs include: The cost of temporary directors. Where to file amended 1040x The cost of organizational meetings. Where to file amended 1040x State incorporation fees. Where to file amended 1040x The cost of legal services. Where to file amended 1040x Nonqualifying costs. Where to file amended 1040x   The following items are capital expenses that cannot be amortized: Costs for issuing and selling stock or securities, such as commissions, professional fees, and printing costs. Where to file amended 1040x Costs associated with the transfer of assets to the corporation. Where to file amended 1040x Costs of Organizing a Partnership The costs to organize a partnership are the direct costs of creating the partnership. Where to file amended 1040x Qualifying costs. Where to file amended 1040x   A partnership can amortize an organizational cost only if it meets all the following tests. Where to file amended 1040x It is for the creation of the partnership and not for starting or operating the partnership trade or business. Where to file amended 1040x It is chargeable to a capital account (see chapter 1). Where to file amended 1040x It could be amortized over the life of the partnership if the partnership had a fixed life. Where to file amended 1040x It is incurred by the due date of the partnership return (excluding extensions) for the first tax year in which the partnership is in business. Where to file amended 1040x However, if the partnership uses the cash method of accounting and pays the cost after the end of its first tax year, see Cash method partnership under How To Amortize, later. Where to file amended 1040x It is for a type of item normally expected to benefit the partnership throughout its entire life. Where to file amended 1040x   Organizational costs include the following fees. Where to file amended 1040x Legal fees for services incident to the organization of the partnership, such as negotiation and preparation of the partnership agreement. Where to file amended 1040x Accounting fees for services incident to the organization of the partnership. Where to file amended 1040x Filing fees. Where to file amended 1040x Nonqualifying costs. Where to file amended 1040x   The following costs cannot be amortized. Where to file amended 1040x The cost of acquiring assets for the partnership or transferring assets to the partnership. Where to file amended 1040x The cost of admitting or removing partners, other than at the time the partnership is first organized. Where to file amended 1040x The cost of making a contract concerning the operation of the partnership trade or business including a contract between a partner and the partnership. Where to file amended 1040x The costs for issuing and marketing interests in the partnership such as brokerage, registration, and legal fees and printing costs. Where to file amended 1040x These “syndication fees” are capital expenses that cannot be depreciated or amortized. Where to file amended 1040x Liquidation of partnership. Where to file amended 1040x   If a partnership is liquidated before the end of the amortization period, the unamortized amount of qualifying organizational costs can be deducted in the partnership's final tax year. Where to file amended 1040x However, these costs can be deducted only to the extent they qualify as a loss from a business. Where to file amended 1040x How To Amortize Deduct start-up and organizational costs in equal amounts over the applicable amortization period (discussed earlier). Where to file amended 1040x You can choose an amortization period for start-up costs that is different from the period you choose for organizational costs, as long as both are not less than the applicable amortization period. Where to file amended 1040x Once you choose an amortization period, you cannot change it. Where to file amended 1040x To figure your deduction, divide your total start-up or organizational costs by the months in the amortization period. Where to file amended 1040x The result is the amount you can deduct for each month. Where to file amended 1040x Cash method partnership. Where to file amended 1040x   A partnership using the cash method of accounting can deduct an organizational cost only if it has been paid by the end of the tax year. Where to file amended 1040x However, any cost the partnership could have deducted as an organizational cost in an earlier tax year (if it had been paid that year) can be deducted in the tax year of payment. Where to file amended 1040x How To Make the Election To elect to amortize start-up or organizational costs, you must complete and attach Form 4562 to your return for the first tax year you are in business. Where to file amended 1040x You may also be required to attach an accompanying statement (described later) to your return. Where to file amended 1040x For start-up or organizational costs paid or incurred after September 8, 2008, an accompanying statement is not required. Where to file amended 1040x Generally, for start-up or organizational costs paid or incurred before September 9, 2008, and after October 22, 2004, unless you choose to apply Regulations sections 1. Where to file amended 1040x 195-1, 1. Where to file amended 1040x 248-1, and 1. Where to file amended 1040x 709-1, you must also attach an accompanying statement to elect to amortize the costs. Where to file amended 1040x If you have both start-up and organizational costs, attach a separate statement (if required) to your return for each type of cost. Where to file amended 1040x See Starting a Business , earlier, for more information. Where to file amended 1040x Generally, you must file the return by the due date (including any extensions). Where to file amended 1040x However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Where to file amended 1040x For more information, see the instructions for Part VI of Form 4562. Where to file amended 1040x You can choose to forgo the election to amortize by affirmatively electing to capitalize your start-up or organizational costs on your income tax return filed by the due date (including extensions) for the tax year in which the active trade or business begins. Where to file amended 1040x Note. Where to file amended 1040x The election to either amortize or capitalize start-up or organizational costs is irrevocable and applies to all start-up and organizational costs that are related to the trade or business. Where to file amended 1040x If your business is organized as a corporation or partnership, only the corporation or partnership can elect to amortize its start-up or organizational costs. Where to file amended 1040x A shareholder or partner cannot make this election. Where to file amended 1040x You, as a shareholder or partner, cannot amortize any costs you incur in setting up your corporation or partnership. Where to file amended 1040x Only the corporation or partnership can amortize these costs. Where to file amended 1040x However, you, as an individual, can elect to amortize costs you incur to investigate an interest in an existing partnership. Where to file amended 1040x These costs qualify as business start-up costs if you acquire the partnership interest. Where to file amended 1040x Start-up costs election statement. Where to file amended 1040x   If you elect to amortize your start-up costs, attach a separate statement (if required) that contains the following information. Where to file amended 1040x A description of the business to which the start-up costs relate. Where to file amended 1040x A description of each start-up cost incurred. Where to file amended 1040x The month your active business began (or was acquired). Where to file amended 1040x The number of months in your amortization period (which is generally 180 months). Where to file amended 1040x Filing the statement early. Where to file amended 1040x   You can elect to amortize your start-up costs by filing the statement with a return for any tax year before the year your active business begins. Where to file amended 1040x If you file the statement early, the election becomes effective in the month of the tax year your active business begins. Where to file amended 1040x Revised statement. Where to file amended 1040x   You can file a revised statement to include any start-up costs not included in your original statement. Where to file amended 1040x However, you cannot include on the revised statement any cost you previously treated on your return as a cost other than a start-up cost. Where to file amended 1040x You can file the revised statement with a return filed after the return on which you elected to amortize your start-up costs. Where to file amended 1040x Organizational costs election statement. Where to file amended 1040x   If you elect to amortize your corporation's or partnership's organizational costs, attach a separate statement (if required) that contains the following information. Where to file amended 1040x A description of each cost. Where to file amended 1040x The amount of each cost. Where to file amended 1040x The date each cost was incurred. Where to file amended 1040x The month your corporation or partnership began active business (or acquired the business). Where to file amended 1040x The number of months in your amortization period (which is generally 180 months). Where to file amended 1040x Partnerships. Where to file amended 1040x   The statement prepared for a cash basis partnership must also indicate the amount paid before the end of the year for each cost. Where to file amended 1040x   You do not need to separately list any partnership organizational cost that is less than $10. Where to file amended 1040x Instead, you can list the total amount of these costs with the dates the first and last costs were incurred. Where to file amended 1040x   After a partnership makes the election to amortize organizational costs, it can later file an amended return to include additional organizational costs not included in the partnership's original return and statement. Where to file amended 1040x Getting a Lease If you get a lease for business property, you may recover the cost of acquiring the lease by amortizing it over the term of the lease. Where to file amended 1040x The term of the lease for amortization purposes generally includes all renewal options (and any other period for which you and the lessor reasonably expect the lease to be renewed). Where to file amended 1040x However, renewal periods are not included if 75% or more of the cost of acquiring the lease is for the term of the lease remaining on the acquisition date (not including any period for which you may choose to renew, extend, or continue the lease). Where to file amended 1040x For more information on the costs of getting a lease, see Cost of Getting a Lease in  chapter 3. Where to file amended 1040x How to amortize. Where to file amended 1040x   Enter your deduction in Part VI of Form 4562 if you are deducting amortization that begins during the current year, or on the appropriate line of your tax return if you are not otherwise required to file Form 4562. Where to file amended 1040x Section 197 Intangibles Generally, you may amortize the capitalized costs of “section 197 intangibles” (defined later) ratably over a 15-year period. Where to file amended 1040x You must amortize these costs if you hold the section 197 intangibles in connection with your trade or business or in an activity engaged in for the production of income. Where to file amended 1040x You may not be able to amortize section 197 intangibles acquired in a transaction that did not result in a significant change in ownership or use. Where to file amended 1040x See Anti-Churning Rules, later. Where to file amended 1040x Your amortization deduction each year is the applicable part of the intangible's adjusted basis (for purposes of determining gain), figured by amortizing it ratably over 15 years (180 months). Where to file amended 1040x The 15-year period begins with the later of: The month the intangible is acquired, or The month the trade or business or activity engaged in for the production of income begins. Where to file amended 1040x You cannot deduct amortization for the month you dispose of the intangible. Where to file amended 1040x If you pay or incur an amount that increases the basis of an amortizable section 197 intangible after the 15-year period begins, amortize it over the remainder of the 15-year period beginning with the month the basis increase occurs. Where to file amended 1040x You are not allowed any other depreciation or amortization deduction for an amortizable section 197 intangible. Where to file amended 1040x Tax-exempt use property subject to a lease. Where to file amended 1040x   The amortization period for any section 197 intangible leased under a lease agreement entered into after March 12, 2004, to a tax-exempt organization, governmental unit, or foreign person or entity (other than a partnership), shall not be less than 125 percent of the lease term. Where to file amended 1040x Cost attributable to other property. Where to file amended 1040x   The rules for section 197 intangibles do not apply to any amount that is included in determining the cost of property that is not a section 197 intangible. Where to file amended 1040x For example, if the cost of computer software is not separately stated from the cost of hardware or other tangible property and you consistently treat it as part of the cost of the hardware or other tangible property, these rules do not apply. Where to file amended 1040x Similarly, none of the cost of acquiring real property held for the production of rental income is considered the cost of goodwill, going concern value, or any other section 197 intangible. Where to file amended 1040x Section 197 Intangibles Defined The following assets are section 197 intangibles and must be amortized over 180 months: Goodwill; Going concern value; Workforce in place; Business books and records, operating systems, or any other information base, including lists or other information concerning current or prospective customers; A patent, copyright, formula, process, design, pattern, know-how, format, or similar item; A customer-based intangible; A supplier-based intangible; Any item similar to items (3) through (7); A license, permit, or other right granted by a governmental unit or agency (including issuances and renewals); A covenant not to compete entered into in connection with the acquisition of an interest in a trade or business; Any franchise, trademark, or trade name; and A contract for the use of, or a term interest in, any item in this list. Where to file amended 1040x You cannot amortize any of the intangibles listed in items (1) through (8) that you created rather than acquired unless you created them in acquiring assets that make up a trade or business or a substantial part of a trade or business. Where to file amended 1040x Goodwill. Where to file amended 1040x   This is the value of a trade or business based on expected continued customer patronage due to its name, reputation, or any other factor. Where to file amended 1040x Going concern value. Where to file amended 1040x   This is the additional value of a trade or business that attaches to property because the property is an integral part of an ongoing business activity. Where to file amended 1040x It includes value based on the ability of a business to continue to function and generate income even though there is a change in ownership (but does not include any other section 197 intangible). Where to file amended 1040x It also includes value based on the immediate use or availability of an acquired trade or business, such as the use of earnings during any period in which the business would not otherwise be available or operational. Where to file amended 1040x Workforce in place, etc. Where to file amended 1040x   This includes the composition of a workforce (for example, its experience, education, or training). Where to file amended 1040x It also includes the terms and conditions of employment, whether contractual or otherwise, and any other value placed on employees or any of their attributes. Where to file amended 1040x   For example, you must amortize the part of the purchase price of a business that is for the existence of a highly skilled workforce. Where to file amended 1040x Also, you must amortize the cost of acquiring an existing employment contract or relationship with employees or consultants. Where to file amended 1040x Business books and records, etc. Where to file amended 1040x   This includes the intangible value of technical manuals, training manuals or programs, data files, and accounting or inventory control systems. Where to file amended 1040x It also includes the cost of customer lists, subscription lists, insurance expirations, patient or client files, and lists of newspaper, magazine, radio, and television advertisers. Where to file amended 1040x Patents, copyrights, etc. Where to file amended 1040x   This includes package design, computer software, and any interest in a film, sound recording, videotape, book, or other similar property, except as discussed later under Assets That Are Not Section 197 Intangibles . Where to file amended 1040x Customer-based intangible. Where to file amended 1040x   This is the composition of market, market share, and any other value resulting from the future provision of goods or services because of relationships with customers in the ordinary course of business. Where to file amended 1040x For example, you must amortize the part of the purchase price of a business that is for the existence of the following intangibles. Where to file amended 1040x A customer base. Where to file amended 1040x A circulation base. Where to file amended 1040x An undeveloped market or market growth. Where to file amended 1040x Insurance in force. Where to file amended 1040x A mortgage servicing contract. Where to file amended 1040x An investment management contract. Where to file amended 1040x Any other relationship with customers involving the future provision of goods or services. Where to file amended 1040x   Accounts receivable or other similar rights to income for goods or services provided to customers before the acquisition of a trade or business are not section 197 intangibles. Where to file amended 1040x Supplier-based intangible. Where to file amended 1040x   A supplier-based intangible is the value resulting from the future acquisitions, (through contract or other relationships with suppliers in the ordinary course of business) of goods or services that you will sell or use. Where to file amended 1040x The amount you pay or incur for supplier-based intangibles includes, for example, any portion of the purchase price of an acquired trade or business that is attributable to the existence of a favorable relationship with persons providing distribution services (such as a favorable shelf or display space or a retail outlet), or the existence of favorable supply contracts. Where to file amended 1040x Do not include any amount required to be paid for the goods or services to honor the terms of the agreement or other relationship. Where to file amended 1040x Also, see Assets That Are Not Section 197 Intangibles below. Where to file amended 1040x Government-granted license, permit, etc. Where to file amended 1040x   This is any right granted by a governmental unit or an agency or instrumentality of a governmental unit. Where to file amended 1040x For example, you must amortize the capitalized costs of acquiring (including issuing or renewing) a liquor license, a taxicab medallion or license, or a television or radio broadcasting license. Where to file amended 1040x Covenant not to compete. Where to file amended 1040x   Section 197 intangibles include a covenant not to compete (or similar arrangement) entered into in connection with the acquisition of an interest in a trade or business, or a substantial portion of a trade or business. Where to file amended 1040x An interest in a trade or business includes an interest in a partnership or a corporation engaged in a trade or business. Where to file amended 1040x   An arrangement that requires the former owner to perform services (or to provide property or the use of property) is not similar to a covenant not to compete to the extent the amount paid under the arrangement represents reasonable compensation for those services or for that property or its use. Where to file amended 1040x Franchise, trademark, or trade name. Where to file amended 1040x   A franchise, trademark, or trade name is a section 197 intangible. Where to file amended 1040x You must amortize its purchase or renewal costs, other than certain contingent payments that you can deduct currently. Where to file amended 1040x For information on currently deductible contingent payments, see chapter 11. Where to file amended 1040x Professional sports franchise. Where to file amended 1040x   A franchise engaged in professional sports and any intangible assets acquired in connection with acquiring the franchise (including player contracts) is a section 197 intangible amortizable over a 15-year period. Where to file amended 1040x Contract for the use of, or a term interest in, a section 197 intangible. Where to file amended 1040x   Section 197 intangibles include any right under a license, contract, or other arrangement providing for the use of any section 197 intangible. Where to file amended 1040x It also includes any term interest in any section 197 intangible, whether the interest is outright or in trust. Where to file amended 1040x Assets That Are Not Section 197 Intangibles The following assets are not section 197 intangibles. Where to file amended 1040x Any interest in a corporation, partnership, trust, or estate. Where to file amended 1040x Any interest under an existing futures contract, foreign currency contract, notional principal contract, interest rate swap, or similar financial contract. Where to file amended 1040x Any interest in land. Where to file amended 1040x Most computer software. Where to file amended 1040x (See Computer software , later. Where to file amended 1040x ) Any of the following assets not acquired in connection with the acquisition of a trade or business or a substantial part of a trade or business. Where to file amended 1040x An interest in a film, sound recording, video tape, book, or similar property. Where to file amended 1040x A right to receive tangible property or services under a contract or from a governmental agency. Where to file amended 1040x An interest in a patent or copyright. Where to file amended 1040x Certain rights that have a fixed duration or amount. Where to file amended 1040x (See Rights of fixed duration or amount , later. Where to file amended 1040x ) An interest under either of the following. Where to file amended 1040x An existing lease or sublease of tangible property. Where to file amended 1040x A debt that was in existence when the interest was acquired. Where to file amended 1040x A right to service residential mortgages unless the right is acquired in connection with the acquisition of a trade or business or a substantial part of a trade or business. Where to file amended 1040x Certain transaction costs incurred by parties to a corporate organization or reorganization in which any part of a gain or loss is not recognized. Where to file amended 1040x Intangible property that is not amortizable under the rules for section 197 intangibles can be depreciated if it meets certain requirements. Where to file amended 1040x You generally must use the straight line method over its useful life. Where to file amended 1040x For certain intangibles, the depreciation period is specified in the law and regulations. Where to file amended 1040x For example, the depreciation period for computer software that is not a section 197 intangible is generally 36 months. Where to file amended 1040x For more information on depreciating intangible property, see Intangible Property under What Method Can You Use To Depreciate Your Property? in chapter 1 of Publication 946. Where to file amended 1040x Computer software. Where to file amended 1040x   Section 197 intangibles do not include the following types of computer software. Where to file amended 1040x Software that meets all the following requirements. Where to file amended 1040x It is, or has been, readily available for purchase by the general public. Where to file amended 1040x It is subject to a nonexclusive license. Where to file amended 1040x It has not been substantially modified. Where to file amended 1040x This requirement is considered met if the cost of all modifications is not more than the greater of 25% of the price of the publicly available unmodified software or $2,000. Where to file amended 1040x Software that is not acquired in connection with the acquisition of a trade or business or a substantial part of a trade or business. Where to file amended 1040x Computer software defined. Where to file amended 1040x   Computer software includes all programs designed to cause a computer to perform a desired function. Where to file amended 1040x It also includes any database or similar item that is in the public domain and is incidental to the operation of qualifying software. Where to file amended 1040x Rights of fixed duration or amount. Where to file amended 1040x   Section 197 intangibles do not include any right under a contract or from a governmental agency if the right is acquired in the ordinary course of a trade or business (or in an activity engaged in for the production of income) but not as part of a purchase of a trade or business and either: Has a fixed life of less than 15 years, or Is of a fixed amount that, except for the rules for section 197 intangibles, would be recovered under a method similar to the unit-of-production method of cost recovery. Where to file amended 1040x However, this does not apply to the following intangibles. Where to file amended 1040x Goodwill. Where to file amended 1040x Going concern value. Where to file amended 1040x A covenant not to compete. Where to file amended 1040x A franchise, trademark, or trade name. Where to file amended 1040x A customer-related information base, customer-based intangible, or similar item. Where to file amended 1040x Safe Harbor for Creative Property Costs If you are engaged in the trade or business of film production, you may be able to amortize the creative property costs for properties not set for production within 3 years of the first capitalized transaction. Where to file amended 1040x You may amortize these costs ratably over a 15-year period beginning on the first day of the second half of the tax year in which you properly write off the costs for financial accounting purposes. Where to file amended 1040x If, during the 15-year period, you dispose of the creative property rights, you must continue to amortize the costs over the remainder of the 15-year period. Where to file amended 1040x Creative property costs include costs paid or incurred to acquire and develop screenplays, scripts, story outlines, motion picture production rights to books and plays, and other similar properties for purposes of potential future film development, production, and exploitation. Where to file amended 1040x Amortize these costs using the rules of Revenue Procedure 2004-36. Where to file amended 1040x For more information, see Revenue Procedure 2004-36, 2004-24 I. Where to file amended 1040x R. Where to file amended 1040x B. Where to file amended 1040x 1063, available at  www. Where to file amended 1040x irs. Where to file amended 1040x gov/irb/2004-24_IRB/ar16. Where to file amended 1040x html. Where to file amended 1040x A change in the treatment of creative property costs is a change in method of accounting. Where to file amended 1040x Anti-Churning Rules Anti-churning rules prevent you from amortizing most section 197 intangibles if the transaction in which you acquired them did not result in a significant change in ownership or use. Where to file amended 1040x These rules apply to goodwill and going concern value, and to any other section 197 intangible that is not otherwise depreciable or amortizable. Where to file amended 1040x Under the anti-churning rules, you cannot use 15-year amortization for the intangible if any of the following conditions apply. Where to file amended 1040x You or a related person (defined later) held or used the intangible at any time from July 25, 1991, through August 10, 1993. Where to file amended 1040x You acquired the intangible from a person who held it at any time during the period in (1) and, as part of the transaction, the user did not change. Where to file amended 1040x You granted the right to use the intangible to a person (or a person related to that person) who held or used it at any time during the period in (1). Where to file amended 1040x This applies only if the transaction in which you granted the right and the transaction in which you acquired the intangible are part of a series of related transactions. Where to file amended 1040x See Related person , later, for more information. Where to file amended 1040x Exceptions. Where to file amended 1040x   The anti-churning rules do not apply in the following situations. Where to file amended 1040x You acquired the intangible from a decedent and its basis was stepped up to its fair market value. Where to file amended 1040x The intangible was amortizable as a section 197 intangible by the seller or transferor you acquired it from. Where to file amended 1040x This exception does not apply if the transaction in which you acquired the intangible and the transaction in which the seller or transferor acquired it are part of a series of related transactions. Where to file amended 1040x The gain-recognition exception, discussed later, applies. Where to file amended 1040x Related person. Where to file amended 1040x   For purposes of the anti-churning rules, the following are related persons. Where to file amended 1040x An individual and his or her brothers, sisters, half-brothers, half-sisters, spouse, ancestors (parents, grandparents, etc. Where to file amended 1040x ), and lineal descendants (children, grandchildren, etc. Where to file amended 1040x ). Where to file amended 1040x A corporation and an individual who owns, directly or indirectly, more than 20% of the value of the corporation's outstanding stock. Where to file amended 1040x Two corporations that are members of the same controlled group as defined in section 1563(a) of the Internal Revenue Code, except that “more than 20%” is substituted for “at least 80%” in that definition and the determination is made without regard to subsections (a)(4) and (e)(3)(C) of section 1563. Where to file amended 1040x (For an exception, see section 1. Where to file amended 1040x 197-2(h)(6)(iv) of the regulations. Where to file amended 1040x ) A trust fiduciary and a corporation if more than 20% of the value of the corporation's outstanding stock is owned, directly or indirectly, by or for the trust or grantor of the trust. Where to file amended 1040x The grantor and fiduciary, and the fiduciary and beneficiary, of any trust. Where to file amended 1040x The fiduciaries of two different trusts, and the fiduciaries and beneficiaries of two different trusts, if the same person is the grantor of both trusts. Where to file amended 1040x The executor and beneficiary of an estate. Where to file amended 1040x A tax-exempt educational or charitable organization and a person who directly or indirectly controls the organization (or whose family members control it). Where to file amended 1040x A corporation and a partnership if the same persons own more than 20% of the value of the outstanding stock of the corporation and more than 20% of the capital or profits interest in the partnership. Where to file amended 1040x Two S corporations, and an S corporation and a regular corporation, if the same persons own more than 20% of the value of the outstanding stock of each corporation. Where to file amended 1040x Two partnerships if the same persons own, directly or indirectly, more than 20% of the capital or profits interests in both partnerships. Where to file amended 1040x A partnership and a person who owns, directly or indirectly, more than 20% of the capital or profits interests in the partnership. Where to file amended 1040x Two persons who are engaged in trades or businesses under common control (as described in section 41(f)(1) of the Internal Revenue Code). Where to file amended 1040x When to determine relationship. Where to file amended 1040x   Persons are treated as related if the relationship existed at the following time. Where to file amended 1040x In the case of a single transaction, immediately before or immediately after the transaction in which the intangible was acquired. Where to file amended 1040x In the case of a series of related transactions (or a series of transactions that comprise a qualified stock purchase under section 338(d)(3) of the Internal Revenue Code), immediately before the earliest transaction or immediately after the last transaction. Where to file amended 1040x Ownership of stock. Where to file amended 1040x   In determining whether an individual directly or indirectly owns any of the outstanding stock of a corporation, the following rules apply. Where to file amended 1040x Rule 1. Where to file amended 1040x   Stock directly or indirectly owned by or for a corporation, partnership, estate, or trust is considered owned proportionately by or for its shareholders, partners, or beneficiaries. Where to file amended 1040x Rule 2. Where to file amended 1040x   An individual is considered to own the stock directly or indirectly owned by or for his or her family. Where to file amended 1040x Family includes only brothers and sisters, half-brothers and half-sisters, spouse, ancestors, and lineal descendants. Where to file amended 1040x Rule 3. Where to file amended 1040x   An individual owning (other than by applying Rule 2) any stock in a corporation is considered to own the stock directly or indirectly owned by or for his or her partner. Where to file amended 1040x Rule 4. Where to file amended 1040x   For purposes of applying Rule 1, 2, or 3, treat stock constructively owned by a person under Rule 1 as actually owned by that person. Where to file amended 1040x Do not treat stock constructively owned by an individual under Rule 2 or 3 as owned by the individual for reapplying Rule 2 or 3 to make another person the constructive owner of the stock. Where to file amended 1040x Gain-recognition exception. Where to file amended 1040x   This exception to the anti-churning rules applies if the person you acquired the intangible from (the transferor) meets both of the following requirements. Where to file amended 1040x That person would not be related to you (as described under Related person , earlier) if the 20% test for ownership of stock and partnership interests were replaced by a 50% test. Where to file amended 1040x That person chose to recognize gain on the disposition of the intangible and pay income tax on the gain at the highest tax rate. Where to file amended 1040x See chapter 2 in Publication 544 for information on making this choice. Where to file amended 1040x   If this exception applies, the anti-churning rules apply only to the amount of your adjusted basis in the intangible that is more than the gain recognized by the transferor. Where to file amended 1040x Notification. Where to file amended 1040x   If the person you acquired the intangible from chooses to recognize gain under the rules for this exception, that person must notify you in writing by the due date of the return on which the choice is made. Where to file amended 1040x Anti-abuse rule. Where to file amended 1040x   You cannot amortize any section 197 intangible acquired in a transaction for which the principal purpose was either of the following. Where to file amended 1040x To avoid the requirement that the intangible be acquired after August 10, 1993. Where to file amended 1040x To avoid any of the anti-churning rules. Where to file amended 1040x More information. Where to file amended 1040x   For more information about the anti-churning rules, including additional rules for partnerships, see Regulations section 1. Where to file amended 1040x 197-2(h). Where to file amended 1040x Incorrect Amount of Amortization Deducted If you later discover that you deducted an incorrect amount for amortization for a section 197 intangible in any year, you may be able to make a correction for that year by filing an amended return. Where to file amended 1040x See Amended Return , next. Where to file amended 1040x If you are not allowed to make the correction on an amended return, you can change your accounting method to claim the correct amortization. Where to file amended 1040x See Changing Your Accounting Method , later. Where to file amended 1040x Amended Return If you deducted an incorrect amount for amortization, you can file an amended return to correct the following. Where to file amended 1040x A mathematical error made in any year. Where to file amended 1040x A posting error made in any year. Where to file amended 1040x An amortization deduction for a section 197 intangible for which you have not adopted a method of accounting. Where to file amended 1040x When to file. Where to file amended 1040x   If an amended return is allowed, you must file it by the later of the following dates. Where to file amended 1040x 3 years from the date you filed your original return for the year in which you did not deduct the correct amount. Where to file amended 1040x (A return filed early is considered filed on the due date. Where to file amended 1040x ) 2 years from the time you paid your tax for that year. Where to file amended 1040x Changing Your Accounting Method Generally, you must get IRS approval to change your method of accounting. Where to file amended 1040x File Form 3115, Application for Change in Accounting Method, to request a change to a permissible method of accounting for amortization. Where to file amended 1040x The following are examples of a change in method of accounting for amortization. Where to file amended 1040x A change in the amortization method, period of recovery, or convention of an amortizable asset. Where to file amended 1040x A change in the accounting for amortizable assets from a single asset account to a multiple asset account (pooling), or vice versa. Where to file amended 1040x A change in the accounting for amortizable assets from one type of multiple asset account to a different type of multiple asset account. Where to file amended 1040x Changes in amortization that are not a change in method of accounting include the following: A change in computing amortization in the tax year in which your use of the asset changes. Where to file amended 1040x An adjustment in the useful life of an amortizable asset. Where to file amended 1040x Generally, the making of a late amortization election or the revocation of a timely valid amortization election. Where to file amended 1040x Any change in the placed-in-service date of an amortizable asset. Where to file amended 1040x See Regulations section 1. Where to file amended 1040x 446-1(e)(2)(ii)(a) for more information and examples. Where to file amended 1040x Automatic approval. Where to file amended 1040x   In some instances, you may be able to get automatic approval from the IRS to change your method of accounting for amortization. Where to file amended 1040x For a list of automatic accounting method changes, see the Instructions for Form 3115. Where to file amended 1040x Also see the Instructions for Form 3115 for more information on getting approval, automatic approval procedures, and a list of exceptions to the automatic approval process. Where to file amended 1040x For more information, see Revenue Procedure 2006-12, as modified by Revenue Procedure 2006-37, and Revenue Procedure 2008-52, as amplified, clarified, and modified by Revenue Procedure 2009-39, as clarified and modified by Revenue Procedure 2011-14, as modified and amplified by Revenue Procedure 2011-22, as modified by Revenue Procedure 2012-39, or any successor. Where to file amended 1040x See Revenue Procedure 2006-12, 2006-3 I. Where to file amended 1040x R. Where to file amended 1040x B. Where to file amended 1040x 310, available at  www. Where to file amended 1040x irs. Where to file amended 1040x gov/irb/2006-03_IRB/ar14. Where to file amended 1040x html. Where to file amended 1040x  See Revenue Procedure 2006-37, 2006-38 I. Where to file amended 1040x R. Where to file amended 1040x B. Where to file amended 1040x 499, available at  www. Where to file amended 1040x irs. Where to file amended 1040x gov/irb/2006-38_IRB/ar10. Where to file amended 1040x html. Where to file amended 1040x  See Revenue Procedure 2008-52, 2008-36 I. Where to file amended 1040x R. Where to file amended 1040x B. Where to file amended 1040x 587, available at www. Where to file amended 1040x irs. Where to file amended 1040x gov/irb/2008-36_IRB/ar09. Where to file amended 1040x html. Where to file amended 1040x  See Revenue Procedure 2009-39, 2009-38 I. Where to file amended 1040x R. Where to file amended 1040x B. Where to file amended 1040x 371, available at  www. Where to file amended 1040x irs. Where to file amended 1040x gov/irb/2009-38_IRB/ar08. Where to file amended 1040x html. Where to file amended 1040x  See Revenue Procedure 2011-14, 2011-4 I. Where to file amended 1040x R. Where to file amended 1040x B. Where to file amended 1040x 330, available at  www. Where to file amended 1040x irs. Where to file amended 1040x gov/irb/2011-04_IRB/ar08. Where to file amended 1040x html. Where to file amended 1040x  See Revenue Procedure 2011-22, 2011-18 I. Where to file amended 1040x R. Where to file amended 1040x B. Where to file amended 1040x 737, available at  www. Where to file amended 1040x irs. Where to file amended 1040x gov/irb/2011-18_IRB/ar08. Where to file amended 1040x html. Where to file amended 1040x Also, see Revenue Procedure 2012-39, 2012-41 I. Where to file amended 1040x R. Where to file amended 1040x B. Where to file amended 1040x 470 available at www. Where to file amended 1040x irs. Where to file amended 1040x gov/irb/2012-41_IRB/index. Where to file amended 1040x html. Where to file amended 1040x Disposition of Section 197 Intangibles A section 197 intangible is treated as depreciable property used in your trade or business. Where to file amended 1040x If you held the intangible for more than 1 year, any gain on its disposition, up to the amount of allowable amortization, is ordinary income (section 1245 gain). Where to file amended 1040x If multiple section 197 intangibles are disposed of in a single transaction or a series of related transactions, treat all of the section 197 intangibles as if they were a single asset for purposes of determining the amount of gain that is ordinary income. Where to file amended 1040x Any remaining gain, or any loss, is a section 1231 gain or loss. Where to file amended 1040x If you held the intangible 1 year or less, any gain or loss on its disposition is an ordinary gain or loss. Where to file amended 1040x For more information on ordinary or capital gain or loss on business property, see chapter 3 in Publication 544. Where to file amended 1040x Nondeductible loss. Where to file amended 1040x   You cannot deduct any loss on the disposition or worthlessness of a section 197 intangible that you acquired in the same transaction (or series of related transactions) as other section 197 intangibles you still have. Where to file amended 1040x Instead, increase the adjusted basis of each remaining amortizable section 197 intangible by a proportionate part of the nondeductible loss. Where to file amended 1040x Figure the increase by multiplying the nondeductible loss on the disposition of the intangible by the following fraction. Where to file amended 1040x The numerator is the adjusted basis of each remaining intangible on the date of the disposition. Where to file amended 1040x The denominator is the total adjusted bases of all remaining amortizable section 197 intangibles on the date of the disposition. Where to file amended 1040x Covenant not to compete. Where to file amended 1040x   A covenant not to compete, or similar arrangement, is not considered disposed of or worthless before you dispose of your entire interest in the trade or business for which you entered into the covenant. Where to file amended 1040x Nonrecognition transfers. Where to file amended 1040x   If you acquire a section 197 intangible in a nonrecognition transfer, you are treated as the transferor with respect to the part of your adjusted basis in the intangible that is not more than the transferor's adjusted basis. Where to file amended 1040x You amortize this part of the adjusted basis over the intangible's remaining amortization period in the hands of the transferor. Where to file amended 1040x Nonrecognition transfers include transfers to a corporation, partnership contributions and distributions, like-kind exchanges, and involuntary conversions. Where to file amended 1040x   In a like-kind exchange or involuntary conversion of a section 197 intangible, you must continue to amortize the part of your adjusted basis in the acquired intangible that is not more than your adjusted basis in the exchanged or converted intangible over the remaining amortization period of the exchanged or converted intangible. Where to file amended 1040x Amortize over a new 15-year period the part of your adjusted basis in the acquired intangible that is more than your adjusted basis in the exchanged or converted intangible. Where to file amended 1040x Example. Where to file amended 1040x You own a section 197 intangible you have amortized for 4 full years. Where to file amended 1040x It has a remaining unamortized basis of $30,000. Where to file amended 1040x You exchange the asset plus $10,000 for a like-kind section 197 intangible. Where to file amended 1040x The nonrecognition provisions of like-kind exchanges apply. Where to file amended 1040x You amortize $30,000 of the $40,000 adjusted basis of the acquired intangible over the 11 years remaining in the original 15-year amortization period for the transferred asset. Where to file amended 1040x You amortize the other $10,000 of adjusted basis over a new 15-year period. Where to file amended 1040x For more information, see Regulations section 1. Where to file amended 1040x 197-2(g). Where to file amended 1040x Reforestation Costs You can elect to deduct a limited amount of reforestation costs paid or incurred during the tax year. Where to file amended 1040x See Reforestation Costs in chapter 7. Where to file amended 1040x You can elect to amortize the qualifying costs that are not deducted currently over an 84-month period. Where to file amended 1040x There is no limit on the amount of your amortization deduction for reforestation costs paid or incurred during the tax year. Where to file amended 1040x The election to amortize reforestation costs incurred by a partnership, S corporation, or estate must be made by the partnership, corporation, or estate. Where to file amended 1040x A partner, shareholder, or beneficiary cannot make that election. Where to file amended 1040x A partner's or shareholder's share of amortizable costs is figured under the general rules for allocating items of income, loss, deduction, etc. Where to file amended 1040x , of a partnership or S corporation. Where to file amended 1040x The amortizable costs of an estate are divided between the estate and the income beneficiary based on the income of the estate allocable to each. Where to file amended 1040x Qualifying costs. Where to file amended 1040x   Reforestation costs are the direct costs of planting or seeding for forestation or reforestation. Where to file amended 1040x Qualifying costs include only those costs you must capitalize and include in the adjusted basis of the property. Where to file amended 1040x They include costs for the following items. Where to file amended 1040x Site preparation. Where to file amended 1040x Seeds or seedlings. Where to file amended 1040x Labor. Where to file amended 1040x Tools. Where to file amended 1040x Depreciation on equipment used in planting and seeding. Where to file amended 1040x Qualifying costs do not include costs for which the government reimburses you under a cost-sharing program, unless you include the reimbursement in your income. Where to file amended 1040x Qualified timber property. Where to file amended 1040x   Qualified timber property is property that contains trees in significant commercial quantities. Where to file amended 1040x It can be a woodlot or other site that you own or lease. Where to file amended 1040x The property qualifies only if it meets all of the following requirements. Where to file amended 1040x It is located in the United States. Where to file amended 1040x It is held for the growing and cutting of timber you will either use in, or sell for use in, the commercial production of timber products. Where to file amended 1040x It consists of at least one acre planted with tree seedlings in the manner normally used in forestation or reforestation. Where to file amended 1040x Qualified timber property does not include property on which you have planted shelter belts or ornamental trees, such as Christmas trees. Where to file amended 1040x Amortization period. Where to file amended 1040x   The 84-month amortization period starts on the first day of the first month of the second half of the tax year you incur the costs (July 1 for a calendar year taxpayer), regardless of the month you actually incur the costs. Where to file amended 1040x You can claim amortization deductions for no more than 6 months of the first and last (eighth) tax years of the period. Where to file amended 1040x Life tenant and remainderman. Where to file amended 1040x   If one person holds the property for life with the remainder going to another person, the life tenant is entitled to the full amortization for qualifying reforestation costs incurred by the life tenant. Where to file amended 1040x Any remainder interest in the property is ignored for amortization purposes. Where to file amended 1040x Recapture. Where to file amended 1040x   If you dispose of qualified timber property within 10 years after the tax year you incur qualifying reforestation expenses, report any gain as ordinary income up to the amortization you took. Where to file amended 1040x See chapter 3 of Publication 544 for more information. Where to file amended 1040x How to make the election. Where to file amended 1040x   To elect to amortize qualifying reforestation costs, complete Part VI of Form 4562 and attach a statement that contains the following information. Where to file amended 1040x A description of the costs and the dates you incurred them. Where to file amended 1040x A description of the type of timber being grown and the purpose for which it is grown. Where to file amended 1040x Attach a separate statement for each property for which you amortize reforestation costs. Where to file amended 1040x   Generally, you must make the election on a timely filed return (including extensions) for the tax year in which you incurred the costs. Where to file amended 1040x However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Where to file amended 1040x Attach Form 4562 and the statement to the amended return and write “Filed pursuant to section 301. Where to file amended 1040x 9100-2” on Form 4562. Where to file amended 1040x File the amended return at the same address you filed the original return. Where to file amended 1040x Revoking the election. Where to file amended 1040x   You must get IRS approval to revoke your election to amortize qualifying reforestation costs. Where to file amended 1040x Your application to revoke the election must include your name, address, the years for which your election was in effect, and your reason for revoking it. Where to file amended 1040x Please provide your daytime telephone number (optional), in case we need to contact you. Where to file amended 1040x You, or your duly authorized representative, must sign the application and file it at least 90 days before the due date (without extensions) for filing your income tax return for the first tax year for which your election is to end. Where to file amended 1040x    Send the application to: Internal Revenue Service Associate Chief Counsel Passthroughs and Special Industries CC:PSI:6 1111 Constitution Ave. Where to file amended 1040x NW, IR-5300 Washington, DC 20224 Geological and Geophysical Costs You can amortize the cost of geological and geophysical expenses paid or incurred in connection with oil and gas exploration or development within the United States. Where to file amended 1040x These costs can be amortized ratably over a 24-month period beginning on the mid-point of the tax year in which the expenses were paid or incurred. Where to file amended 1040x For major integrated oil companies (as defined in section 167(h)(5)), these costs must be amortized ratably over a 5-year period for costs paid or incurred after May 17, 2006 (a 7-year period for costs paid or incurred after December 19, 2007). Where to file amended 1040x If you retire or abandon the property during the amortization period, no amortization deduction is allowed in the year of retirement or abandonment. Where to file amended 1040x Pollution Control Facilities You can elect to amortize the cost of a certified pollution control facility over 60 months. Where to file amended 1040x However, see Atmospheric pollution control facilities for an exception. Where to file amended 1040x The cost of a pollution control facility that is not eligible for amortization can be depreciated under the regular rules for depreciation. Where to file amended 1040x Also, you can claim a special depreciation allowance on a certified pollution control facility that is qualified property even if you elect to amortize its cost. Where to file amended 1040x You must reduce its cost (amortizable basis) by the amount of any special allowance you claim. Where to file amended 1040x See chapter 3 of Publication 946. Where to file amended 1040x A certified pollution control facility is a new identifiable treatment facility used in connection with a plant or other property in operation before 1976, to reduce or control water or atmospheric pollution or contamination. Where to file amended 1040x The facility must do so by removing, changing, disposing, storing, or preventing the creation or emission of pollutants, contaminants, wastes, or heat. Where to file amended 1040x The facility must be certified by state and federal certifying authorities. Where to file amended 1040x The facility must not significantly increase the output or capacity, extend the useful life, or reduce the total operating costs of the plant or other property. Where to file amended 1040x Also, it must not significantly change the nature of the manufacturing or production process or facility. Where to file amended 1040x The federal certifying authority will not certify your property to the extent it appears you will recover (over the property's useful life) all or part of its cost from the profit based on its operation (such as through sales of recovered wastes). Where to file amended 1040x The federal certifying authority will describe the nature of the potential cost recovery. Where to file amended 1040x You must then reduce the amortizable basis of the facility by this potential recovery. Where to file amended 1040x New identifiable treatment facility. Where to file amended 1040x   A new identifiable treatment facility is tangible depreciable property that is identifiable as a treatment facility. Where to file amended 1040x It does not include a building and its structural components unless the building is exclusively a treatment facility. Where to file amended 1040x Atmospheric pollution control facilities. Where to file amended 1040x   Certain atmospheric pollution control facilities can be amortized over 84 months. Where to file amended 1040x To qualify, the following must apply. Where to file amended 1040x The facility must be acquired and placed in service after April 11, 2005. Where to file amended 1040x If acquired, the original use must begin with you after April 11, 2005. Where to file amended 1040x The facility must be used in connection with an electric generation plant or other property placed in operation after December 31, 1975, that is primarily coal fired. Where to file amended 1040x If you construct, reconstruct, or erect the facility, only the basis attributable to the construction, reconstruction, or erection completed after April 11, 2005, qualifies. Where to file amended 1040x Basis reduction for corporations. Where to file amended 1040x   A corporation must reduce the amortizable basis of a pollution control facility by 20% before figuring the amortization deduction. Where to file amended 1040x More information. Where to file amended 1040x   For more information on the amortization of pollution control facilities, see Code sections 169 and 291(c) and the related regulations. Where to file amended 1040x Research and Experimental Costs You can elect to amortize your research and experimental costs, deduct them as current business expenses, or write them off over a 10-year period (see Optional write-off method below). Where to file amended 1040x If you elect to amortize these costs, deduct them in equal amounts over 60 months or more. Where to file amended 1040x The amortization period begins the month you first receive an economic benefit from the costs. Where to file amended 1040x For a definition of “research and experimental costs” and information on deducting them as current business expenses, see chapter 7. Where to file amended 1040x Optional write-off method. Where to file amended 1040x   Rather than amortize these costs or deduct them as a current expense, you have the option of deducting (writing off) research and experimental costs ratably over a 10-year period beginning with the tax year in which you incurred the costs. Where to file amended 1040x For more information, see Optional Write-off of Certain Tax Preferences , later, and section 59(e) of the Internal Revenue Code. Where to file amended 1040x Costs you can amortize. Where to file amended 1040x   You can amortize costs chargeable to a capital account (see chapter 1) if you meet both of the following requirements. Where to file amended 1040x You paid or incurred the costs in your trade or business. Where to file amended 1040x You are not deducting the costs currently. Where to file amended 1040x How to make the election. Where to file amended 1040x   To elect to amortize research and experimental costs, complete Part VI of Form 4562 and attach it to your income tax return. Where to file amended 1040x Generally, you must file the return by the due date (including extensions). Where to file amended 1040x However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Where to file amended 1040x Attach Form 4562 to the amended return and write “Filed pursuant to section 301. Where to file amended 1040x 9100-2” on Form 4562. Where to file amended 1040x File the amended return at the same address you filed the original return. Where to file amended 1040x   Your election is binding for the year it is made and for all later years unless you obtain approval from the IRS to change to a different method. Where to file amended 1040x Optional Write-off of Certain Tax Preferences You can elect to amortize certain tax preference items over an optional period beginning in the tax year in which you incurred the costs. Where to file amended 1040x If you make this election, there is no AMT adjustment. Where to file amended 1040x The applicable costs and the optional recovery periods are as follows: Circulation costs — 3 years, Intangible drilling and development costs — 60 months, Mining exploration and development costs — 10 years, and Research and experimental costs — 10 years. Where to file amended 1040x How to make the election. Where to file amended 1040x   To elect to amortize qualifying costs over the optional recovery period, complete Part VI of Form 4562 and attach a statement containing the following information to your return for the tax year in which the election begins: Your name, address, and taxpayer identification number; and The type of cost and the specific amount of the cost for which you are making the election. Where to file amended 1040x   Generally, the election must be made on a timely filed return (including extensions) for the tax year in which you incurred the costs. Where to file amended 1040x However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Where to file amended 1040x Attach Form 4562 to the amended return and write “Filed pursuant to section 301. Where to file amended 1040x 9100-2” on Form 4562. Where to file amended 1040x File the amended return at the same address you filed the original return. Where to file amended 1040x Revoking the election. Where to file amended 1040x   You must obtain consent from the IRS to revoke your election. Where to file amended 1040x Your request to revoke the election must be submitted to the IRS in the form of a letter ruling before the end of the tax year in which the optional recovery period ends. Where to file amended 1040x The request must contain all of the information necessary to demonstrate the rare and unusual circumstances that would justify granting revocation. Where to file amended 1040x If the request for revocation is approved, any unamortized costs are deductible in the year the revocation is effective. Where to file amended 1040x Prev  Up  Next   Home   More Online Publications