[Code of Federal Regulations]
[Title 26, Volume 2]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.167(a)-14T]

[Page 990-991]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.167(a)-14T  Treatment of certain intangible property excluded 
from section 197 (temporary).

    (a) For further guidance, see Sec. 1.167(a)-14(a).
    (b) Computer software--(1) In general. The amount of the deduction 
for computer software described in section 167(f)(1) and Sec. 1.197-
2(c)(4) is determined by amortizing the cost or other basis of the 
computer software using the straight line method described in Sec. 
1.167(b)-1 (except that its salvage value is treated as zero) and an 
amortization period of 36 months beginning on the first day of the month 
that the computer software is placed in service. Before determining the 
amortization deduction allowable under this paragraph (b), the cost or 
other basis of computer software that is section 179 property, as 
defined in section 179(d)(1)(A)(ii), must be reduced for any portion of 
the basis the taxpayer properly elects to treat as an expense under 
section 179. In addition, the cost or other basis of computer software 
that is qualified property under section 168(k)(2) or Sec. 1.168(k)-1T, 
50-percent bonus depreciation property under section 168(k)(4) or Sec. 
1.168(k)-1T, or qualified New York Liberty Zone property under section 
1400L(b) or Sec. 1.1400L(b)-1T, must be reduced by the amount of the 
additional first year depreciation deduction allowed or allowable, 
whichever is greater, under section 168(k) or section 1400L(b) for the 
computer software. If costs for developing computer software that the 
taxpayer properly elects to defer under section 174(b) result in the 
development of property subject to the allowance for depreciation under 
section 167, the rules of this paragraph (b) will apply to the 
unrecovered costs. In addition, this paragraph (b) applies to the cost 
of separately acquired computer software if the cost to acquire the 
software is separately stated and the cost is required to be capitalized 
under section 263(a).
    (b)(2)-(e)(1) For further guidance, see Sec. 1.167(a)-14(b)(2) 
through (e)(1).
    (e)(2) Change in method of accounting. See Sec. 1.197-2(l)(4) for 
rules relating to changes in method of accounting for property to which 
Sec. 1.167(a)-14T applies. However, see Sec. 1.168(k)-1T(g)(4) or 
1.1400L(b)-1T(g)(4) for rules relating to changes in method of 
accounting for computer software to which the third sentence in Sec. 
1.167(a)-14T(b)(1) applies.
    (3) Qualified property, 50-percent bonus depreciation property, 
qualified New York Liberty Zone property, or section 179 property. This 
section also applies to computer software that is qualified property 
under section 168(k)(2) or qualified New York Liberty Zone property 
under section 1400L(b) acquired by a taxpayer after September 10, 2001, 
and to computer software that is 50-percent bonus depreciation property 
under section 168(k)(4) acquired by a taxpayer after May 5, 2003. This 
section also applies to computer software that is section 179 property 
placed in service

[[Page 991]]

by a taxpayer in a taxable year beginning after 2002 and before 2006. 
This section expires on September 4, 2006.

[T.D. 9091, 68 FR 52991, Sept. 8, 2003; 68 FR 63734, Nov. 10, 2003]