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File State Tax Return

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File State Tax Return

File state tax return Publication 542 - Introductory Material Table of Contents Introduction Useful Items - You may want to see: Photographs of missing children. File state tax return  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. File state tax return Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. File state tax return You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. File state tax return Introduction This publication discusses the general tax laws that apply to ordinary domestic corporations. File state tax return It explains the tax law in plain language so it will be easier to understand. File state tax return However, the information given does not cover every situation and is not intended to replace the law or change its meaning. File state tax return Note. File state tax return This publication is not revised on an annual basis. File state tax return To find changes that may affect current year returns, see the instructions for your income tax return for the current year; and Changes to Current Forms and Publications at www. File state tax return irs. File state tax return gov/formspubs. File state tax return Comments and suggestions. File state tax return   We welcome your comments about this publication and your suggestions for future editions. File state tax return   You can write to us at the following address: Internal Revenue Service Business, Exempt Organizations and International Forms and Publications Branch SE:W:CAR:MP:T:B 1111 Constitution Ave. File state tax return NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. File state tax return Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. File state tax return   You can email us at *taxforms@irs. File state tax return gov (The asterisk must be included in the address). File state tax return Please put “Publications Comment” on the subject line. File state tax return You can also send us comments at www. File state tax return irs. File state tax return gov/formspubs/. File state tax return Select “Comment on Tax Forms and Publications” under “Information about. File state tax return ” Although we cannot respond individually to each comment, we do appreciate your feedback and will consider your comments as we revise our tax products. File state tax return Tax questions. File state tax return   If you have a tax question, visit IRS. File state tax return gov or call 1-800-829-1040. File state tax return We cannot answer tax questions at either of the addresses listed above. File state tax return Ordering forms and publications. File state tax return   Visit www. File state tax return irs. File state tax return gov/formspubs to download forms and publications, call 1-800-829-3676, or write to the National Distribution Center at the address shown under How to Get Tax Help, later in this publication. File state tax return Additional forms. File state tax return   A list of other forms and statements that a corporation may need to file is included at the end of this publication. File state tax return Useful Items - You may want to see: Publication 510 Excise Taxes (Including Fuel Tax Credits and Refunds) 535 Business Expenses 538 Accounting Periods and Methods 544 Sales and Other Dispositions of Assets 550 Investment Income and Expenses 925 Passive Activity and At-Risk Rules 946 How to Depreciate Property Prev  Up  Next   Home   More Online Publications
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Understanding your CP09 Notice

We've sent you this notice because our records indicate you may be eligible for the Earned Income Credit (EIC), but didn't claim it on your tax return.


What you need to do

  • Read your notice carefully — it will explain the steps needed to determine your qualifications.
  • Complete the Earned Income Credit Eligibility Worksheet.

    If you are eligible for the credit,
    • Sign and date the worksheet.
    • Mail the signed worksheet in the envelope provided.
    If you are not eligible for the credit,
    • Do not return the worksheet to us.

What we will do

We will review your worksheet and make a determination.

  • If you're eligible for the credit, we'll send you a refund check in 6 ― 8 weeks, as long as you don't owe tax or any other debts we’re required to collect.
  • If we deny the credit, we will send you a letter of explanation.
  • If you don't hear from us after 8 weeks, call our toll free line at 1-800-829-0922 to check the status.

You may want to...


Answers to Common Questions

Why did the IRS send me this notice?
You may be eligible for the Earned Income Credit (EIC). The EIC is a credit for certain people who work and have earned income. The credit may give you a refund even if you do not owe any tax.


Tips for next year

Claim the credit if you are still eligible.

Ask the IRS to figure the earned income credit for you by writing "EIC" on the EIC line, complete Schedule EIC, and attach it to your return. If you qualify for the credit, the IRS will calculate it for you.

Write "NO" on the EIC line if you do not want or you do not qualify for the credit.

Page Last Reviewed or Updated: 19-Feb-2014

How to get help

  • Call the 1-800 number listed on the top right corner of your notice.
  • Authorize someone (e.g., accountant) to contact the IRS on your behalf using Form 2848.
  • See if you qualify for help from a Low Income Taxpayer Clinic.
     

The File State Tax Return

File state tax return 8. File state tax return   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. File state tax return 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. File state tax return It is similar to the straight line method of depreciation. File state tax return The various amortizable costs covered in this chapter are included in the list below. File state tax return However, this chapter does not discuss amortization of bond premium. File state tax return For information on that topic, see chapter 3 of Publication 550, Investment Income and Expenses. File state tax return 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. File state tax return 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. File state tax return To report amortization from previous years, in addition to amortization that begins in the current year, list on Form 4562 each item separately. File state tax return For example, in 2012, you began to amortize a lease. File state tax return In 2013, you began to amortize a second lease. File state tax return Report amortization from the new lease on line 42 of your 2013 Form 4562. File state tax return Report amortization from the 2012 lease on line 43 of your 2013 Form 4562. File state tax return 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). File state tax return 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. File state tax return 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. File state tax return Generally, you recover costs for particular assets through depreciation deductions. File state tax return However, you generally cannot recover other costs until you sell the business or otherwise go out of business. File state tax return 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. File state tax return For costs paid or incurred after September 8, 2008, you can deduct a limited amount of start-up and organizational costs. File state tax return The costs that are not deducted currently can be amortized ratably over a 180-month period. File state tax return The amortization period starts with the month you begin operating your active trade or business. File state tax return You are not required to attach a statement to make this election. File state tax return 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. File state tax return 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. File state tax return See Regulations sections 1. File state tax return 195-1, 1. File state tax return 248-1, and 1. File state tax return 709-1. File state tax return 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. File state tax return Any costs not deducted can be amortized ratably over a 180-month period, beginning with the month you begin business. File state tax return If the election is made, you must attach any statement required by Regulations sections 1. File state tax return 195-1(b), 1. File state tax return 248-1(c), and 1. File state tax return 709-1(c), as in effect before September 9, 2008. File state tax return Note. File state tax return You can apply the provisions of Regulations sections 1. File state tax return 195-1, 1. File state tax return 248-1, and 1. File state tax return 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. File state tax return Otherwise, the provisions under Regulations sections 1. File state tax return 195-1(b), 1. File state tax return 248-1(c), and 1. File state tax return 709-1(c), as in effect before September 9, 2008, will apply. File state tax return 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. File state tax return See How To Make the Election , later. File state tax return The cost must qualify as one of the following. File state tax return A business start-up cost. File state tax return An organizational cost for a corporation. File state tax return An organizational cost for a partnership. File state tax return 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. File state tax return 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. File state tax return Qualifying costs. File state tax return   A start-up cost is amortizable if it meets both of the following tests. File state tax return 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). File state tax return It is a cost you pay or incur before the day your active trade or business begins. File state tax return   Start-up costs include amounts paid for the following: An analysis or survey of potential markets, products, labor supply, transportation facilities, etc. File state tax return Advertisements for the opening of the business. File state tax return Salaries and wages for employees who are being trained and their instructors. File state tax return Travel and other necessary costs for securing prospective distributors, suppliers, or customers. File state tax return Salaries and fees for executives and consultants, or for similar professional services. File state tax return Nonqualifying costs. File state tax return   Start-up costs do not include deductible interest, taxes, or research and experimental costs. File state tax return See Research and Experimental Costs , later. File state tax return Purchasing an active trade or business. File state tax return   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. File state tax return These are costs that help you decide whether to purchase a business. File state tax return Costs you incur in an attempt to purchase a specific business are capital expenses that you cannot amortize. File state tax return Example. File state tax return On June 1st, you hired an accounting firm and a law firm to assist you in the potential purchase of XYZ, Inc. File state tax return They researched XYZ's industry and analyzed the financial projections of XYZ, Inc. File state tax return In September, the law firm prepared and submitted a letter of intent to XYZ, Inc. File state tax return The letter stated that a binding commitment would result only after a purchase agreement was signed. File state tax return 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. File state tax return On October 22nd, you signed a purchase agreement with XYZ, Inc. File state tax return All amounts paid or incurred to investigate the business before October 22nd are amortizable investigative costs. File state tax return Amounts paid on or after that date relate to the attempt to purchase the business and therefore must be capitalized. File state tax return Disposition of business. File state tax return   If you completely dispose of your business before the end of the amortization period, you can deduct any remaining deferred start-up costs. File state tax return However, you can deduct these deferred start-up costs only to the extent they qualify as a loss from a business. File state tax return Costs of Organizing a Corporation Amounts paid to organize a corporation are the direct costs of creating the corporation. File state tax return Qualifying costs. File state tax return   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. File state tax return   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. File state tax return   Examples of organizational costs include: The cost of temporary directors. File state tax return The cost of organizational meetings. File state tax return State incorporation fees. File state tax return The cost of legal services. File state tax return Nonqualifying costs. File state tax return   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. File state tax return Costs associated with the transfer of assets to the corporation. File state tax return Costs of Organizing a Partnership The costs to organize a partnership are the direct costs of creating the partnership. File state tax return Qualifying costs. File state tax return   A partnership can amortize an organizational cost only if it meets all the following tests. File state tax return It is for the creation of the partnership and not for starting or operating the partnership trade or business. File state tax return It is chargeable to a capital account (see chapter 1). File state tax return It could be amortized over the life of the partnership if the partnership had a fixed life. File state tax return 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. File state tax return 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. File state tax return It is for a type of item normally expected to benefit the partnership throughout its entire life. File state tax return   Organizational costs include the following fees. File state tax return Legal fees for services incident to the organization of the partnership, such as negotiation and preparation of the partnership agreement. File state tax return Accounting fees for services incident to the organization of the partnership. File state tax return Filing fees. File state tax return Nonqualifying costs. File state tax return   The following costs cannot be amortized. File state tax return The cost of acquiring assets for the partnership or transferring assets to the partnership. File state tax return The cost of admitting or removing partners, other than at the time the partnership is first organized. File state tax return The cost of making a contract concerning the operation of the partnership trade or business including a contract between a partner and the partnership. File state tax return The costs for issuing and marketing interests in the partnership such as brokerage, registration, and legal fees and printing costs. File state tax return These “syndication fees” are capital expenses that cannot be depreciated or amortized. File state tax return Liquidation of partnership. File state tax return   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. File state tax return However, these costs can be deducted only to the extent they qualify as a loss from a business. File state tax return How To Amortize Deduct start-up and organizational costs in equal amounts over the applicable amortization period (discussed earlier). File state tax return 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. File state tax return Once you choose an amortization period, you cannot change it. File state tax return To figure your deduction, divide your total start-up or organizational costs by the months in the amortization period. File state tax return The result is the amount you can deduct for each month. File state tax return Cash method partnership. File state tax return   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. File state tax return 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. File state tax return 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. File state tax return You may also be required to attach an accompanying statement (described later) to your return. File state tax return For start-up or organizational costs paid or incurred after September 8, 2008, an accompanying statement is not required. File state tax return 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. File state tax return 195-1, 1. File state tax return 248-1, and 1. File state tax return 709-1, you must also attach an accompanying statement to elect to amortize the costs. File state tax return If you have both start-up and organizational costs, attach a separate statement (if required) to your return for each type of cost. File state tax return See Starting a Business , earlier, for more information. File state tax return Generally, you must file the return by the due date (including any extensions). File state tax return 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). File state tax return For more information, see the instructions for Part VI of Form 4562. File state tax return 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. File state tax return Note. File state tax return 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. File state tax return 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. File state tax return A shareholder or partner cannot make this election. File state tax return You, as a shareholder or partner, cannot amortize any costs you incur in setting up your corporation or partnership. File state tax return Only the corporation or partnership can amortize these costs. File state tax return However, you, as an individual, can elect to amortize costs you incur to investigate an interest in an existing partnership. File state tax return These costs qualify as business start-up costs if you acquire the partnership interest. File state tax return Start-up costs election statement. File state tax return   If you elect to amortize your start-up costs, attach a separate statement (if required) that contains the following information. File state tax return A description of the business to which the start-up costs relate. File state tax return A description of each start-up cost incurred. File state tax return The month your active business began (or was acquired). File state tax return The number of months in your amortization period (which is generally 180 months). File state tax return Filing the statement early. File state tax return   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. File state tax return If you file the statement early, the election becomes effective in the month of the tax year your active business begins. File state tax return Revised statement. File state tax return   You can file a revised statement to include any start-up costs not included in your original statement. File state tax return 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. File state tax return You can file the revised statement with a return filed after the return on which you elected to amortize your start-up costs. File state tax return Organizational costs election statement. File state tax return   If you elect to amortize your corporation's or partnership's organizational costs, attach a separate statement (if required) that contains the following information. File state tax return A description of each cost. File state tax return The amount of each cost. File state tax return The date each cost was incurred. File state tax return The month your corporation or partnership began active business (or acquired the business). File state tax return The number of months in your amortization period (which is generally 180 months). File state tax return Partnerships. File state tax return   The statement prepared for a cash basis partnership must also indicate the amount paid before the end of the year for each cost. File state tax return   You do not need to separately list any partnership organizational cost that is less than $10. File state tax return Instead, you can list the total amount of these costs with the dates the first and last costs were incurred. File state tax return   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. File state tax return 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. File state tax return 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). File state tax return 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). File state tax return For more information on the costs of getting a lease, see Cost of Getting a Lease in  chapter 3. File state tax return How to amortize. File state tax return   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. File state tax return Section 197 Intangibles Generally, you may amortize the capitalized costs of “section 197 intangibles” (defined later) ratably over a 15-year period. File state tax return 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. File state tax return 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. File state tax return See Anti-Churning Rules, later. File state tax return 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). File state tax return 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. File state tax return You cannot deduct amortization for the month you dispose of the intangible. File state tax return 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. File state tax return You are not allowed any other depreciation or amortization deduction for an amortizable section 197 intangible. File state tax return Tax-exempt use property subject to a lease. File state tax return   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. File state tax return Cost attributable to other property. File state tax return   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. File state tax return 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. File state tax return 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. File state tax return 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. File state tax return 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. File state tax return Goodwill. File state tax return   This is the value of a trade or business based on expected continued customer patronage due to its name, reputation, or any other factor. File state tax return Going concern value. File state tax return   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. File state tax return 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). File state tax return 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. File state tax return Workforce in place, etc. File state tax return   This includes the composition of a workforce (for example, its experience, education, or training). File state tax return 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. File state tax return   For example, you must amortize the part of the purchase price of a business that is for the existence of a highly skilled workforce. File state tax return Also, you must amortize the cost of acquiring an existing employment contract or relationship with employees or consultants. File state tax return Business books and records, etc. File state tax return   This includes the intangible value of technical manuals, training manuals or programs, data files, and accounting or inventory control systems. File state tax return 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. File state tax return Patents, copyrights, etc. File state tax return   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 . File state tax return Customer-based intangible. File state tax return   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. File state tax return For example, you must amortize the part of the purchase price of a business that is for the existence of the following intangibles. File state tax return A customer base. File state tax return A circulation base. File state tax return An undeveloped market or market growth. File state tax return Insurance in force. File state tax return A mortgage servicing contract. File state tax return An investment management contract. File state tax return Any other relationship with customers involving the future provision of goods or services. File state tax return   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. File state tax return Supplier-based intangible. File state tax return   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. File state tax return 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. File state tax return Do not include any amount required to be paid for the goods or services to honor the terms of the agreement or other relationship. File state tax return Also, see Assets That Are Not Section 197 Intangibles below. File state tax return Government-granted license, permit, etc. File state tax return   This is any right granted by a governmental unit or an agency or instrumentality of a governmental unit. File state tax return 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. File state tax return Covenant not to compete. File state tax return   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. File state tax return An interest in a trade or business includes an interest in a partnership or a corporation engaged in a trade or business. File state tax return   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. File state tax return Franchise, trademark, or trade name. File state tax return   A franchise, trademark, or trade name is a section 197 intangible. File state tax return You must amortize its purchase or renewal costs, other than certain contingent payments that you can deduct currently. File state tax return For information on currently deductible contingent payments, see chapter 11. File state tax return Professional sports franchise. File state tax return   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. File state tax return Contract for the use of, or a term interest in, a section 197 intangible. File state tax return   Section 197 intangibles include any right under a license, contract, or other arrangement providing for the use of any section 197 intangible. File state tax return It also includes any term interest in any section 197 intangible, whether the interest is outright or in trust. File state tax return Assets That Are Not Section 197 Intangibles The following assets are not section 197 intangibles. File state tax return Any interest in a corporation, partnership, trust, or estate. File state tax return Any interest under an existing futures contract, foreign currency contract, notional principal contract, interest rate swap, or similar financial contract. File state tax return Any interest in land. File state tax return Most computer software. File state tax return (See Computer software , later. File state tax return ) 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. File state tax return An interest in a film, sound recording, video tape, book, or similar property. File state tax return A right to receive tangible property or services under a contract or from a governmental agency. File state tax return An interest in a patent or copyright. File state tax return Certain rights that have a fixed duration or amount. File state tax return (See Rights of fixed duration or amount , later. File state tax return ) An interest under either of the following. File state tax return An existing lease or sublease of tangible property. File state tax return A debt that was in existence when the interest was acquired. File state tax return 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. File state tax return Certain transaction costs incurred by parties to a corporate organization or reorganization in which any part of a gain or loss is not recognized. File state tax return Intangible property that is not amortizable under the rules for section 197 intangibles can be depreciated if it meets certain requirements. File state tax return You generally must use the straight line method over its useful life. File state tax return For certain intangibles, the depreciation period is specified in the law and regulations. File state tax return For example, the depreciation period for computer software that is not a section 197 intangible is generally 36 months. File state tax return 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. File state tax return Computer software. File state tax return   Section 197 intangibles do not include the following types of computer software. File state tax return Software that meets all the following requirements. File state tax return It is, or has been, readily available for purchase by the general public. File state tax return It is subject to a nonexclusive license. File state tax return It has not been substantially modified. File state tax return 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. File state tax return Software that is not acquired in connection with the acquisition of a trade or business or a substantial part of a trade or business. File state tax return Computer software defined. File state tax return   Computer software includes all programs designed to cause a computer to perform a desired function. File state tax return It also includes any database or similar item that is in the public domain and is incidental to the operation of qualifying software. File state tax return Rights of fixed duration or amount. File state tax return   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. File state tax return However, this does not apply to the following intangibles. File state tax return Goodwill. File state tax return Going concern value. File state tax return A covenant not to compete. File state tax return A franchise, trademark, or trade name. File state tax return A customer-related information base, customer-based intangible, or similar item. File state tax return 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. File state tax return 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. File state tax return 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. File state tax return 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. File state tax return Amortize these costs using the rules of Revenue Procedure 2004-36. File state tax return For more information, see Revenue Procedure 2004-36, 2004-24 I. File state tax return R. File state tax return B. File state tax return 1063, available at  www. File state tax return irs. File state tax return gov/irb/2004-24_IRB/ar16. File state tax return html. File state tax return A change in the treatment of creative property costs is a change in method of accounting. File state tax return 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. File state tax return These rules apply to goodwill and going concern value, and to any other section 197 intangible that is not otherwise depreciable or amortizable. File state tax return Under the anti-churning rules, you cannot use 15-year amortization for the intangible if any of the following conditions apply. File state tax return You or a related person (defined later) held or used the intangible at any time from July 25, 1991, through August 10, 1993. File state tax return 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. File state tax return 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). File state tax return 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. File state tax return See Related person , later, for more information. File state tax return Exceptions. File state tax return   The anti-churning rules do not apply in the following situations. File state tax return You acquired the intangible from a decedent and its basis was stepped up to its fair market value. File state tax return The intangible was amortizable as a section 197 intangible by the seller or transferor you acquired it from. File state tax return 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. File state tax return The gain-recognition exception, discussed later, applies. File state tax return Related person. File state tax return   For purposes of the anti-churning rules, the following are related persons. File state tax return An individual and his or her brothers, sisters, half-brothers, half-sisters, spouse, ancestors (parents, grandparents, etc. File state tax return ), and lineal descendants (children, grandchildren, etc. File state tax return ). File state tax return A corporation and an individual who owns, directly or indirectly, more than 20% of the value of the corporation's outstanding stock. File state tax return 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. File state tax return (For an exception, see section 1. File state tax return 197-2(h)(6)(iv) of the regulations. File state tax return ) 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. File state tax return The grantor and fiduciary, and the fiduciary and beneficiary, of any trust. File state tax return 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. File state tax return The executor and beneficiary of an estate. File state tax return A tax-exempt educational or charitable organization and a person who directly or indirectly controls the organization (or whose family members control it). File state tax return 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. File state tax return 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. File state tax return Two partnerships if the same persons own, directly or indirectly, more than 20% of the capital or profits interests in both partnerships. File state tax return A partnership and a person who owns, directly or indirectly, more than 20% of the capital or profits interests in the partnership. File state tax return Two persons who are engaged in trades or businesses under common control (as described in section 41(f)(1) of the Internal Revenue Code). File state tax return When to determine relationship. File state tax return   Persons are treated as related if the relationship existed at the following time. File state tax return In the case of a single transaction, immediately before or immediately after the transaction in which the intangible was acquired. File state tax return 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. File state tax return Ownership of stock. File state tax return   In determining whether an individual directly or indirectly owns any of the outstanding stock of a corporation, the following rules apply. File state tax return Rule 1. File state tax return   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. File state tax return Rule 2. File state tax return   An individual is considered to own the stock directly or indirectly owned by or for his or her family. File state tax return Family includes only brothers and sisters, half-brothers and half-sisters, spouse, ancestors, and lineal descendants. File state tax return Rule 3. File state tax return   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. File state tax return Rule 4. File state tax return   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. File state tax return 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. File state tax return Gain-recognition exception. File state tax return   This exception to the anti-churning rules applies if the person you acquired the intangible from (the transferor) meets both of the following requirements. File state tax return 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. File state tax return That person chose to recognize gain on the disposition of the intangible and pay income tax on the gain at the highest tax rate. File state tax return See chapter 2 in Publication 544 for information on making this choice. File state tax return   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. File state tax return Notification. File state tax return   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. File state tax return Anti-abuse rule. File state tax return   You cannot amortize any section 197 intangible acquired in a transaction for which the principal purpose was either of the following. File state tax return To avoid the requirement that the intangible be acquired after August 10, 1993. File state tax return To avoid any of the anti-churning rules. File state tax return More information. File state tax return   For more information about the anti-churning rules, including additional rules for partnerships, see Regulations section 1. File state tax return 197-2(h). File state tax return 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. File state tax return See Amended Return , next. File state tax return If you are not allowed to make the correction on an amended return, you can change your accounting method to claim the correct amortization. File state tax return See Changing Your Accounting Method , later. File state tax return Amended Return If you deducted an incorrect amount for amortization, you can file an amended return to correct the following. File state tax return A mathematical error made in any year. File state tax return A posting error made in any year. File state tax return An amortization deduction for a section 197 intangible for which you have not adopted a method of accounting. File state tax return When to file. File state tax return   If an amended return is allowed, you must file it by the later of the following dates. File state tax return 3 years from the date you filed your original return for the year in which you did not deduct the correct amount. File state tax return (A return filed early is considered filed on the due date. File state tax return ) 2 years from the time you paid your tax for that year. File state tax return Changing Your Accounting Method Generally, you must get IRS approval to change your method of accounting. File state tax return File Form 3115, Application for Change in Accounting Method, to request a change to a permissible method of accounting for amortization. File state tax return The following are examples of a change in method of accounting for amortization. File state tax return A change in the amortization method, period of recovery, or convention of an amortizable asset. File state tax return A change in the accounting for amortizable assets from a single asset account to a multiple asset account (pooling), or vice versa. File state tax return A change in the accounting for amortizable assets from one type of multiple asset account to a different type of multiple asset account. File state tax return 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. File state tax return An adjustment in the useful life of an amortizable asset. File state tax return Generally, the making of a late amortization election or the revocation of a timely valid amortization election. File state tax return Any change in the placed-in-service date of an amortizable asset. File state tax return See Regulations section 1. File state tax return 446-1(e)(2)(ii)(a) for more information and examples. File state tax return Automatic approval. File state tax return   In some instances, you may be able to get automatic approval from the IRS to change your method of accounting for amortization. File state tax return For a list of automatic accounting method changes, see the Instructions for Form 3115. File state tax return 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. File state tax return 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. File state tax return See Revenue Procedure 2006-12, 2006-3 I. File state tax return R. File state tax return B. File state tax return 310, available at  www. File state tax return irs. File state tax return gov/irb/2006-03_IRB/ar14. File state tax return html. File state tax return  See Revenue Procedure 2006-37, 2006-38 I. File state tax return R. File state tax return B. File state tax return 499, available at  www. File state tax return irs. File state tax return gov/irb/2006-38_IRB/ar10. File state tax return html. File state tax return  See Revenue Procedure 2008-52, 2008-36 I. File state tax return R. File state tax return B. File state tax return 587, available at www. File state tax return irs. File state tax return gov/irb/2008-36_IRB/ar09. File state tax return html. File state tax return  See Revenue Procedure 2009-39, 2009-38 I. File state tax return R. File state tax return B. File state tax return 371, available at  www. File state tax return irs. File state tax return gov/irb/2009-38_IRB/ar08. File state tax return html. File state tax return  See Revenue Procedure 2011-14, 2011-4 I. File state tax return R. File state tax return B. File state tax return 330, available at  www. File state tax return irs. File state tax return gov/irb/2011-04_IRB/ar08. File state tax return html. File state tax return  See Revenue Procedure 2011-22, 2011-18 I. File state tax return R. File state tax return B. File state tax return 737, available at  www. File state tax return irs. File state tax return gov/irb/2011-18_IRB/ar08. File state tax return html. File state tax return Also, see Revenue Procedure 2012-39, 2012-41 I. File state tax return R. File state tax return B. File state tax return 470 available at www. File state tax return irs. File state tax return gov/irb/2012-41_IRB/index. File state tax return html. File state tax return Disposition of Section 197 Intangibles A section 197 intangible is treated as depreciable property used in your trade or business. File state tax return 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). File state tax return 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. File state tax return Any remaining gain, or any loss, is a section 1231 gain or loss. File state tax return If you held the intangible 1 year or less, any gain or loss on its disposition is an ordinary gain or loss. File state tax return For more information on ordinary or capital gain or loss on business property, see chapter 3 in Publication 544. File state tax return Nondeductible loss. File state tax return   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. File state tax return Instead, increase the adjusted basis of each remaining amortizable section 197 intangible by a proportionate part of the nondeductible loss. File state tax return Figure the increase by multiplying the nondeductible loss on the disposition of the intangible by the following fraction. File state tax return The numerator is the adjusted basis of each remaining intangible on the date of the disposition. File state tax return The denominator is the total adjusted bases of all remaining amortizable section 197 intangibles on the date of the disposition. File state tax return Covenant not to compete. File state tax return   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. File state tax return Nonrecognition transfers. File state tax return   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. File state tax return You amortize this part of the adjusted basis over the intangible's remaining amortization period in the hands of the transferor. File state tax return Nonrecognition transfers include transfers to a corporation, partnership contributions and distributions, like-kind exchanges, and involuntary conversions. File state tax return   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. File state tax return 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. File state tax return Example. File state tax return You own a section 197 intangible you have amortized for 4 full years. File state tax return It has a remaining unamortized basis of $30,000. File state tax return You exchange the asset plus $10,000 for a like-kind section 197 intangible. File state tax return The nonrecognition provisions of like-kind exchanges apply. File state tax return 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. File state tax return You amortize the other $10,000 of adjusted basis over a new 15-year period. File state tax return For more information, see Regulations section 1. File state tax return 197-2(g). File state tax return Reforestation Costs You can elect to deduct a limited amount of reforestation costs paid or incurred during the tax year. File state tax return See Reforestation Costs in chapter 7. File state tax return You can elect to amortize the qualifying costs that are not deducted currently over an 84-month period. File state tax return There is no limit on the amount of your amortization deduction for reforestation costs paid or incurred during the tax year. File state tax return The election to amortize reforestation costs incurred by a partnership, S corporation, or estate must be made by the partnership, corporation, or estate. File state tax return A partner, shareholder, or beneficiary cannot make that election. File state tax return A partner's or shareholder's share of amortizable costs is figured under the general rules for allocating items of income, loss, deduction, etc. File state tax return , of a partnership or S corporation. File state tax return 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. File state tax return Qualifying costs. File state tax return   Reforestation costs are the direct costs of planting or seeding for forestation or reforestation. File state tax return Qualifying costs include only those costs you must capitalize and include in the adjusted basis of the property. File state tax return They include costs for the following items. File state tax return Site preparation. File state tax return Seeds or seedlings. File state tax return Labor. File state tax return Tools. File state tax return Depreciation on equipment used in planting and seeding. File state tax return 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. File state tax return Qualified timber property. File state tax return   Qualified timber property is property that contains trees in significant commercial quantities. File state tax return It can be a woodlot or other site that you own or lease. File state tax return The property qualifies only if it meets all of the following requirements. File state tax return It is located in the United States. File state tax return 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. File state tax return It consists of at least one acre planted with tree seedlings in the manner normally used in forestation or reforestation. File state tax return Qualified timber property does not include property on which you have planted shelter belts or ornamental trees, such as Christmas trees. File state tax return Amortization period. File state tax return   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. File state tax return You can claim amortization deductions for no more than 6 months of the first and last (eighth) tax years of the period. File state tax return Life tenant and remainderman. File state tax return   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. File state tax return Any remainder interest in the property is ignored for amortization purposes. File state tax return Recapture. File state tax return   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. File state tax return See chapter 3 of Publication 544 for more information. File state tax return How to make the election. File state tax return   To elect to amortize qualifying reforestation costs, complete Part VI of Form 4562 and attach a statement that contains the following information. File state tax return A description of the costs and the dates you incurred them. File state tax return A description of the type of timber being grown and the purpose for which it is grown. File state tax return Attach a separate statement for each property for which you amortize reforestation costs. File state tax return   Generally, you must make the election on a timely filed return (including extensions) for the tax year in which you incurred the costs. File state tax return 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). File state tax return Attach Form 4562 and the statement to the amended return and write “Filed pursuant to section 301. File state tax return 9100-2” on Form 4562. File state tax return File the amended return at the same address you filed the original return. File state tax return Revoking the election. File state tax return   You must get IRS approval to revoke your election to amortize qualifying reforestation costs. File state tax return 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. File state tax return Please provide your daytime telephone number (optional), in case we need to contact you. File state tax return 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. File state tax return    Send the application to: Internal Revenue Service Associate Chief Counsel Passthroughs and Special Industries CC:PSI:6 1111 Constitution Ave. File state tax return 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. File state tax return 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. File state tax return 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). File state tax return If you retire or abandon the property during the amortization period, no amortization deduction is allowed in the year of retirement or abandonment. File state tax return Pollution Control Facilities You can elect to amortize the cost of a certified pollution control facility over 60 months. File state tax return However, see Atmospheric pollution control facilities for an exception. File state tax return The cost of a pollution control facility that is not eligible for amortization can be depreciated under the regular rules for depreciation. File state tax return 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. File state tax return You must reduce its cost (amortizable basis) by the amount of any special allowance you claim. File state tax return See chapter 3 of Publication 946. File state tax return 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. File state tax return The facility must do so by removing, changing, disposing, storing, or preventing the creation or emission of pollutants, contaminants, wastes, or heat. File state tax return The facility must be certified by state and federal certifying authorities. File state tax return 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. File state tax return Also, it must not significantly change the nature of the manufacturing or production process or facility. File state tax return 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). File state tax return The federal certifying authority will describe the nature of the potential cost recovery. File state tax return You must then reduce the amortizable basis of the facility by this potential recovery. File state tax return New identifiable treatment facility. File state tax return   A new identifiable treatment facility is tangible depreciable property that is identifiable as a treatment facility. File state tax return It does not include a building and its structural components unless the building is exclusively a treatment facility. File state tax return Atmospheric pollution control facilities. File state tax return   Certain atmospheric pollution control facilities can be amortized over 84 months. File state tax return To qualify, the following must apply. File state tax return The facility must be acquired and placed in service after April 11, 2005. File state tax return If acquired, the original use must begin with you after April 11, 2005. File state tax return 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. File state tax return If you construct, reconstruct, or erect the facility, only the basis attributable to the construction, reconstruction, or erection completed after April 11, 2005, qualifies. File state tax return Basis reduction for corporations. File state tax return   A corporation must reduce the amortizable basis of a pollution control facility by 20% before figuring the amortization deduction. File state tax return More information. File state tax return   For more information on the amortization of pollution control facilities, see Code sections 169 and 291(c) and the related regulations. File state tax return 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). File state tax return If you elect to amortize these costs, deduct them in equal amounts over 60 months or more. File state tax return The amortization period begins the month you first receive an economic benefit from the costs. File state tax return For a definition of “research and experimental costs” and information on deducting them as current business expenses, see chapter 7. File state tax return Optional write-off method. File state tax return   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. File state tax return For more information, see Optional Write-off of Certain Tax Preferences , later, and section 59(e) of the Internal Revenue Code. File state tax return Costs you can amortize. File state tax return   You can amortize costs chargeable to a capital account (see chapter 1) if you meet both of the following requirements. File state tax return You paid or incurred the costs in your trade or business. File state tax return You are not deducting the costs currently. File state tax return How to make the election. File state tax return   To elect to amortize research and experimental costs, complete Part VI of Form 4562 and attach it to your income tax return. File state tax return Generally, you must file the return by the due date (including extensions). File state tax return 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). File state tax return Attach Form 4562 to the amended return and write “Filed pursuant to section 301. File state tax return 9100-2” on Form 4562. File state tax return File the amended return at the same address you filed the original return. File state tax return   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. File state tax return 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. File state tax return If you make this election, there is no AMT adjustment. File state tax return 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. File state tax return How to make the election. File state tax return   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. File state tax return   Generally, the election must be made on a timely filed return (including extensions) for the tax year in which you incurred the costs. File state tax return 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). File state tax return Attach Form 4562 to the amended return and write “Filed pursuant to section 301. File state tax return 9100-2” on Form 4562. File state tax return File the amended return at the same address you filed the original return. File state tax return Revoking the election. File state tax return   You must obtain consent from the IRS to revoke your election. File state tax return 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. File state tax return The request must contain all of the information necessary to demonstrate the rare and unusual circumstances that would justify granting revocation. File state tax return If the request for revocation is approved, any unamortized costs are deductible in the year the revocation is effective. File state tax return Prev  Up  Next   Home   More Online Publications