On May 5 of the current tax year, Byrne purchased a patent that qualifies as a § 197 intangible. The cost of the patent was $207,000 and Byrne is a calendar-year taxpayer. In the current tax year, how much of the patent's cost may Byrne amortize?

a. $1,150.

b. $4,600.

c. $9,200.

d. $13,800.

e. None of the above.

Question

Clarissa

Business

6 December, 09:13

On May 5 of the current tax year, Byrne purchased a patent that qualifies as a § 197 intangible. The cost of the patent was $207,000 and Byrne is a calendar-year taxpayer. In the current tax year, how much of the patent's cost may Byrne amortize?

a. $1,150.

b. $4,600.

c. $9,200.

d. $13,800.

e. None of the above.

+4

Answers (1)

Know the Answer?

Raven Spencer · Answer 1

C) $9,200

Explanation:

A § 197 intangible patent may be amortized using a straight line basis over 180 months (15 years). Since he bought the patent during May, he can amortize 8 months (May to December).

amortization for the year = ($207,000 / 180 months) x 8 months = $1,150 per month x 8 months = $9,200