 |
|
| 1031 ADVISOR April 2009 |
UPCOMING SEMINARS MAY 6, 2009 Live! Advanced Maximize |
IRS Reverses Position on Certain Intangible Assets Intangible Property (I.P.), a.k.a. Intellectual Property, assets are one of the most important assets in commerce today. Between sixty to eighty percent of the assets of U.S. Corporations are classified as Intellectual Property assets. Furthermore, investment in Intellectual Property and the resulting innovation is the primary engine for growth in the U.S. economy. It is important for companies to be able to determine which assets to invest in, to acquire, or dispose of with the least possible tax cost as possible. U.S. tax policy has gradually recognized the value of these assets. First, by piecemeal changes to the existing law. Second, by enacting Section 197, permitting the amortization of numerous classes of intellectual property, including goodwill. In the area of Section 1031 exchanges, the IRS continues to expand and liberalize the interpretation of what is like-kind and what assets are exchangeable. The Office of the Associate Chief Counsel (Income Tax and Accounting) just released TAM 200911006 which changes the previously issued TAM and FAA regulations regarding intangibles. Prior Rulings. Previously, in TAM 200602034, the IRS stated that intangibles, such as trade name and trademarks, could not be considered like-kind to similar intangibles of any other business because they are closely related to goodwill of the business being sold. New Ruling. The IRS states, in TAM 200911006, that intangibles, such as trademarks, trade names, mast heads and customer-based intangibles, are not always part of goodwill. Furthermore, these same intangible assets can be treated as separate assets as long as they can be separately described and valued apart from goodwill. Therefore, intangible assets, such as trademarks, trade names, mastheads, and customer-based intangibles, can now be used for Section 1031 exchanges since they can be valued apart from goodwill. Barriers. As we have stated in prior newsletters, the major stumbling blocks in Section 1031 Exchanges of I.P. assets are:
This means that the I.P. assets have to be separately identified in the purchase and sale agreement in order to take advantage of the tax savings that like-kind exchanges can provide. Let Strategic Property Exchanges, LLC guide you through the Section 1031 Exchanges of Intangible Property Assets. In addition to asset and debt matching, we provide tax reporting that conforms to statutory requirements, generally accepted accounting principles and Circular 230.
|
||
Contact Mailing Address: |
|
|