Tax Policy:

Amortizing Purchased Intangible Assets

T-GGD-92-1: Published: Oct 2, 1991. Publicly Released: Oct 2, 1991.

Additional Materials:


Office of Public Affairs
(202) 512-4800

GAO discussed the current tax rules for the treatment of purchased intangible assets. GAO noted that: (1) Internal Revenue Service (IRS) tax data on unresolved or open intangible asset cases showed that taxpayers in 9 industry groups claimed deductions for 175 types of purchased intangible assets valued at $23.5 billion; (2) IRS believed that 70 percent of the claimed intangible assets were actually good will and not amortizable; (3) tax rules are much clearer for tangible than for intangible assets, and courts have issued conflicting and inconsistent decisions regarding the treatment and definition of intangible assets; (4) eliminating any distinction between the tax treatment of purchased goodwill and that of other purchased intangibles would do away with controversies over whether the taxpayer has purchased an amortizable asset; (5) establishing statutory cost recovery periods would simplify useful life determinations; and (6) proposed legislation would expand amortization of purchased intangible assets through easier amortization qualification standards, a more restrictive definition of good will, and the use of predetermined cost-recovery periods for amortization, and would disallow amortization for specific purchased intangible assets or categories of intangible assets by deeming them to have indeterminable useful lives.

Sep 13, 2016

Sep 6, 2016

Jul 29, 2016

Jul 7, 2016

Jun 27, 2016

Jun 23, 2016

Apr 19, 2016

Apr 13, 2016

Apr 7, 2016

Mar 28, 2016

Looking for more? Browse all our products here