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

Quizplus · Accepted Answer

Section 197 intangibles are amortized over 15 years (180 months). The annual amortization is $207,000 / 15 = $13,800. Since Byrne purchased the patent on May 5, he can amortize for 8 months in the current year: ($13,800 / 12) * 8 = $9,200.

On May 5 of the Current Tax Year, Byrne Purchased