40 years 40 years.
Recording Amortization. To record annual amortization expense, you debit the amortization expense account and credit the intangible asset for the amount of the expense. A debit is one side of an accounting record. A debit increases assets and expense balances while decreasing revenue, net worth and liabilities accounts.  Situation 2. Situation 2 is the same as Situation 1 except that Asset 1 is not amortizable in the hands of the partnership. LAW Section 197(a) provides that a taxpayer is entitled to an amortization deduction with respect to any amortizable section 197 intangible.  Prior to 2001, companies amortized the goodwill intangible asset by recording an expense on the income statement each year. Goodwill was taken at straight-line amortization over a period of up to 40 years. For example, if Company A purchased Company B for $450,000 (i.e., purchase price) and the book value of Company B was only $400,000, the goodwill intangible asset would be $50,000. The $50,000 asset would be amortized for the same amount each year for up to 40 years. If you assume that Company A decided to amortize the goodwill amount over 40 years, then the amortization expense listed on the income statement is $1,250 annually (i.e., $50,000 divided by 40 years) Amortization period. 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. Under the anti-churning rules, you cannot use 15-year amortization for the intangible if any of the following conditions apply. You or a related person (defined later) held or used the intangible at any time from July 25, 1991, through August 10, 1993. 1. Begin amortization of intangible assets when the asset is acquired or when it is available for use. 2. Determine the initial cost of intangible asset. 1  As an example, assume that you bought a patent for your invention. 2  It cost you $50,000 to buy the patent. 3  This will be your initial cost.  You exchange the asset plus $10,000 for a like-kind section 197 intangible. The nonrecognition provisions of like-kind exchanges apply. 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. You amortize the other $10,000 of adjusted basis over a new 15-year period. For more information, see Regulations section 1.197-2(g). Under the anti-churning rules, you cannot use 15-year amortization for the intangible if any of the following conditions apply. You or a related person (defined later) held or used the intangible at any time from July 25, 1991, through August 10, 1993. In the case of any section 197 intangible which would be tax-exempt use property as defined in subsection (h) ofsection 168 if such section applied to such intangible, the amortization period under this section shall not be less than 125 percent of the lease term (within the meaning of section 168 (i)(3)). For purposes of this chapter, any amortizable section 197 intangible shall be treated as property which is of a character subject to the allowance for depreciation provided in section 167. 1 For tax purposes, Goodwill amortization usually uses a straight line write off; an equal amount every year until the Goodwill value is $0. 2  In our example, the IRS allows the business to amortize Goodwill over 15 years, not the entire $250,000 of Goodwill in the year of purchase. 1 In our example, the IRS allows the business to amortize Goodwill over 15 years, not the entire $250,000 of Goodwill in the year of purchase. 2  So, the Goodwill deduction is $16,667 each year, for 15 years. 3  First and last year use a partial deduction based on the date you bought the business Goodwill is carried as an asset and evaluated for impairment at least once a year. Until 2001, goodwill was an amortization expense for a period of up to 40 years. Many companies used the 40-year maximum to neutralize the periodic earnings effect and report supplementary cash earnings that they then added to net income. In accounting, goodwill is accrued when an entity pays more for an asset than its fair value based on the company’s brand, client base or other factors. Corporations use the purchase method of accounting, which does not allow for automatic amortization of goodwill.
http://smallbusiness.chron.com/accounting-entry-amortize-intangible-assets-31853.html https://www.irs.gov/pub/irs-drop/rr-04-49.pdf http://www.ehow.com/info_8289400_goodwill-amortization-rules.html https://www.irs.gov/publications/p535/ch08.html http://www.wikihow.com/Amortize-Assets https://www.irs.gov/publications/p535/ch08.html https://www.law.cornell.edu/uscode/text/26/197 https://cpawilmingtonnc.org/cpa-tax-accountant-discusses-goodwill-amortization-irs-form-4562-depreciation-and-amortization-amortization-schedule-irs-publication-535/ http://www.investopedia.com/ask/answers/010815/how-does-goodwill-amortize.asp
how long do you amortize goodwill