Treatment of Capitalized Costs of Intangible Assets
(Part I) — footnotes

¹ TD 9107 (1/5/04).

² See, e.g., Melone, “Final Intangible Asset Regulations Modify and Clarify, but Conform in Most Respects, to the Proposed Rules,” 31 J Corp. Tax’n 15 (May/June 2004); Jagdman, “Final Regs. on Capitalization of Intangibles,” 35 The Tax Adviser (April 2004); Yale, “The Final INDOPCO Regulations,” 2004 TNT 207-29 (10/26/04); Conjura, et al., “To Capitalize or Not? The INDOPCO Era Ends with Final Regulations Under Section 263(a),” 100 J Tax’n 215 (April 2004); and Burnett and Pulliam, “IRS Provides Much-Needed Guidance on Capitalization of Intangibles,” 73 Practical Tax Strategies 68 (August 2004).

³ INDOPCO, Inc., 503 US 79 (1992).

⁴ For instance, there is a 12-month rule (Regs. Sec. 1.263(a)-4(f)), a $5,000 de minimis rule (Regs. Secs. 1.263(a)-4(e)(4)(iii) and -5(d)(2) and (3)) and a date rule (Regs. Sec. 1.263(a)-5(e)).

⁵ For an in-depth discussion of the INDOPCO regulations, see the articles listed in note 2, supra.

⁶ The term “category” is used in this article, not in the regulations.

⁷ See the preamble to TD 9107, note 1 supra, at II. A. and B.

⁸ Intangible property is not accelerated cost recovery system or modified accelerated cost recovery system property (Sec. 168 property), so it is amortized, if at all, under Sec. 167.

⁹ “Useful life” as used in Sec. 167 should not be confused with “recovery period” as used in Sec. 168.

¹⁰ It is not clear which payments constitute a separate and distinct intangible asset (category 3 intangible asset). Until guidance is issued, this category is an open question.

¹¹ See Regs. Sec. 1.263(a)-1(d)(6)(iv) and (vii), Example 8.

¹² See The Trustee Corp., 42 TC 482 (1964), acq., 1966-2 CB 7.

¹³ Rev. Rul. 71-283, 1971-2 CB 168.

¹⁴ See Third National Bank in Nashville, MD TN, 2/16/71, aff’d per cur., 454 F2d 689 (6th Cir. 1972).

¹⁵ John W. Keiler, II, 285 FSupp 520 (WD KY 1966), aff’d per cur., 395 F2d 991 (6th Cir. 1968).

¹⁶ See the discussion in Part II of this article, in the May 2007 issue, under “Sec. 178 Lease Acquisition Costs.”