(The following is an excerpt from our 1031 Advisor newsletter located here )
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.
