File your Taxes for Free!
  • Get your maximum refund*
  • 100% accurate calculations guaranteed*

TurboTax Federal Free Edition - File Taxes Online

Don't let filing your taxes get you down! We'll help make it as easy as possible. With e-file and direct deposit, there's no faster way to get your refund!

Approved TurboTax Affiliate Site. TurboTax and TurboTax Online, among others, are registered trademarks and/or service marks of Intuit Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.


© 2012 - 2018 All rights reserved.

This is an Approved TurboTax Affiliate site. TurboTax and TurboTax Online, among other are registered trademarks and/or service marks of Intuit, Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.
When discussing "Free e-file", note that state e-file is an additional fee. E-file fees do not apply to New York state returns. Prices are subject to change without notice. E-file and get your refund faster
*If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
*Maximum Refund Guarantee - or Your Money Back: If you get a larger refund or smaller tax due from another tax preparation method, we'll refund the applicable TurboTax federal and/or state purchase price paid. TurboTax Federal Free Edition customers are entitled to payment of $14.99 and a refund of your state purchase price paid. Claims must be submitted within sixty (60) days of your TurboTax filing date and no later than 6/15/14. E-file, Audit Defense, Professional Review, Refund Transfer and technical support fees are excluded. This guarantee cannot be combined with the TurboTax Satisfaction (Easy) Guarantee. *We're so confident your return will be done right, we guarantee it. Accurate calculations guaranteed. If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
https://turbotax.intuit.com/corp/guarantees.jsp

State Income Tax Rate

Free Turbo Tax Filing 2013Income Tax FormsIrs 1040 Ez OnlineAmend 2009 Tax Return OnlineAmend My 2012 Tax ReturnTaxslayer WebsiteTax Forms For 2012Turbotax Free 1040ezFiling Taxes As A StudentIrs Tax AmendmentPrintable Tax Form 1040Free Tax ReturnsFree State Filing2012 Tax Amendment FormAmending Income Tax Returns For Individuals1040x Instructions 2012Irs Form 1040ez Instructions10ezAmend 2009 Tax ReturnWww Hrblock Com Lp Efile Html &otppartnerid 9012&campaignid Ps_mcm_9012_0011&omnisource Msn Camp028d E Efile Free M Desktop BmmHow To Ammend TaxesAmended State Tax Return2011 1040 FormsForm 1040 NrFile Income Taxes OnlineWww Irs Gov ComTurbotax 2006Irs Ez File OnlineState Tax Return Only2013 Amended Tax Return FormExtension FormFile Federal And State Tax For FreeAmending Taxes1040ez 2010 Form2012 Income Tax SoftwareTax Forms 2011Nj Tax Form 1040xFile State And Federal Taxes Online Free1040ez Instruction Booklet1040ez Online

State Income Tax Rate

State income tax rate Publication 4492-A - Introductory Material Table of Contents Introduction Useful Items - You may want to see: Introduction This publication explains the temporary tax relief provided by the Food, Conservation, and Energy Act of 2008 for taxpayers in Kiowa County, Kansas, and surrounding areas, who were affected by the storms and tornadoes that began on May 4, 2007. State income tax rate Useful Items - You may want to see: Publication 536 Net Operating Losses (NOLs) for Individuals, Estates, and Trusts 547 Casualties, Disasters, and Thefts 590 Individual Retirement Arrangements (IRAs) 946 How To Depreciate Property Form (and Instructions) 4506Request for Copy of Tax Return 4506-TRequest for Transcript of Tax Return 4684Casualties and Thefts 5884-ACredits for Employers Affected by Hurricane Katrina, Rita, or Wilma 8606Nondeductible IRAs 8915Qualified Hurricane Retirement Plan Distributions and Repayments See How To Get Tax Help on page 14 for information about getting publications and forms. State income tax rate Prev  Up  Next   Home   More Online Publications
Print - Click this link to Print this page

Letter 681C Frequently Asked Questions (FAQs)

What is the letter telling me?

Based on the information you provided, we accept your request to pay as we confirmed in the letter. This does not constitute a formal Installment Agreement.

What do I have to do?

Pay as much as you can pay.

How much time do I have?

Pay when you can. It is to your advantage to pay the amount due as soon as possible, since we charge penalty and interest until the balance due is paid.

What happens if I don't take any action?

If you do not make the payment, enforced collection action may be taken to collect the amount you owe.

Who should I contact?

You can call the toll free number provided in the letter. The person that answers the phone will assist you.

Page Last Reviewed or Updated: 30-Jan-2014

The State Income Tax Rate

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