Starting Your Business

What are Business Expenses

Patents/Copyrights/Agreements Not to Compete

Intangible property is property that has value but cannot be seen or touched.

You can elect to amortize certain intangible property you use in connection with a trade or business or for the production of income. Use a 15-year amortization period. You are not allowed any other deduction for intangible property that you amortize.

Amortize the following intangibles.

1. Patents and copyrights.
2. Customer or subscription lists, location contracts, and insurance expirations.
3. Designs, patterns and formats, including certain computer software.
4. Franchises.
5. Certain agreements not to compete.

Caution: If you created any of the intangibles listed in items (1) through (3), you can amortize them only if you created them in connection with acquiring assets that make up a trade or business or a substantial part of a trade or business.

For more information on amortization, see Publication 535. 

Important References:

Publication 535                       Business Expenses
Form 4562                               Depreciation and Amortization
Instructions for Form 4562     Depreciation and Amortization