Video instructions and help with filling out and completing Which Form 4797 Intangible

Instructions and Help about Which Form 4797 Intangible

Okay so with the 179 this is this is another section so we had out where we had a section where it was those at once 179 so these are kind of just transposition things here 179 was the election to expense this section 197 is involved war with intangible assets and that happens like with somebody buys a business so that if you when you buy your business so let's say bond these is going to sell the gas station over there so the all the inventory and the stores were something the land is worth something the equipment is worth something but there is this intangible there's PUD will associated with it and part of you knows just that you pay more because of what they've established they're an established business they have established clientele there's some goodwill there so you might have that that we have that Nazi amortized over 15 years so it's it's kind of one you can have the property assessed and it all stuffs is let's say and a half million but they want six hundred thousand so a hundred thousand and that really is good willed it they have also a covenant not to compete so that if you buy something from them so you buy bodies and you pay them extra for this covenant not to compete because you don't want them opening up a gas station you know on the opposite side is Road from you you know so you have something like that again then those you amortize those looks like depreciation but it's called amortization because it's intangible and it's just up in arbitrary 15 years at the IRS picked to amortize it over franchise and trademarks you amortize those as well so the many intangibles are excluded from 179 but they me but you still can amortize it so like a pass or a copyright that doesn't always just come with when you purchase something but you still can amortize that or the 15 years it's what they call self created so if you come up with some latest and greatest in the new design of a backpack and you have you know you get a patent on your style and you start a company you cannot amortize that that patent and what it costs for you to get it the challenges reported like a taxing agency here really are is does this does Lee it does it really exist was it you see there's goodwill and you're gonna advertise it does that really exist the covenant not to compete and if it does exist exist what value does it have and then how long really is that recovery period so intangibles just because they're intangible they are it's not that easy to see so they gave an example Fiona Weir is purchased it's an artesian textile company 2054 was allocated to Goodwill so looks a typo on my partner to be how much when she advertised in 2021 that 2021 you take the full amount divided by 15 years and then because she bought it in me you have a partial year so she has eight months times the three hundred so this first year would amortize the goodwill that's all that's all they're doing all right you can go to problem 19 amortizes all right so they have they buy this they have fixed assets for 220 goodwill covenant total of 325 so as said the table is how much of the 325 is resection 197 intangible so what do we put in that one section 197 not the fix which are the intangibles these are the this is the 197 so these are the intangible how what would they do with these fixed assets up here of the 220 they're tangible assets so they're just ordinary depreciation on their unless part of it slam but they didn't say any land but those would just be normal depreciation the section 197 so we have a hundred and five thousand there and then so we have a hundred and five thousand how much what is his how much would he do ducks for his amortization for the for 2021 so what do we do well did you what did you do with the 105 divided by 15 years gives you $7,000 yes all right 583 33 and I did little easier in that tonight it was July first that's happy year so I just divide it by 12 months cuz dividing it by two I got a much better number than by 12 same thing though we get it we get back up to 3,500 they have a half a year of amortization is really because you can amortize they bought it July 1st so July 1st until cember 31st equals six months or half a year so that's what we're looking at there for the months that they had in in the book if you look at the so study up each 722 they have a list of items that fall the looking at it would this be under the 15 years of amortization they talked about would you use the useful life for the item that's listed or is it something that is not amortized at all so that's kind of okay I just want to go over that just because they don't give you they have a few more examples here than what we had you met at one problems so if it's a patent that's part of a purchase which category does it fall into 15 years what about when they talk about separately acquired film rights useful life but so we have that so it's that separately acquired then 3 they have computer software sold in an office supply stores useful life again and they specifically talked about that one for Goodwill 15 years so goodwill always comes as part of a sale you've never just pay somebody for goodwill.