[Code of Federal Regulations]
[Title 26, Volume 1]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.197-0]

[Page 271-273]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.197-0  Table of contents.

    This section lists the headings that appear in Sec. 1.197-2.

  Sec. 1.197-2 Amortization of Goodwill and Certain Other Intangibles

    (a) Overview.
    (1) In general.
    (2) Section 167(f) property.
    (3) Amounts otherwise deductible.
    (b) Section 197 intangibles; in general.

[[Page 272]]

    (1) Goodwill.
    (2) Going concern value.
    (3) Workforce in place.
    (4) Information base.
    (5) Know-how, etc.
    (6) Customer-based intangibles.
    (7) Supplier-based intangibles.
    (8) Licenses, permits, and other rights granted by governmental 
units.
    (9) Covenants not to compete and other similar arrangements.
    (10) Franchises, trademarks, and trade names.
    (11) Contracts for the use of, and term interests in, other section 
197 intangibles.
    (12) Other similar items.
    (c) Section 197 intangibles; exceptions.
    (1) Interests in a corporation, partnership, trust, or estate.
    (2) Interests under certain financial contracts.
    (3) Interests in land.
    (4) Certain computer software.
    (i) Publicly available.
    (ii) Not acquired as part of trade or business.
    (iii) Other exceptions.
    (iv) Computer software defined.
    (5) Certain interests in films, sound recordings, video tapes, 
books, or other similar property.
    (6) Certain rights to receive tangible property or services.
    (7) Certain interests in patents or copyrights.
    (8) Interests under leases of tangible property.
    (i) Interest as a lessor.
    (ii) Interest as a lessee.
    (9) Interests under indebtedness.
    (i) In general.
    (ii) Exceptions.
    (10) Professional sports franchises.
    (11) Mortgage servicing rights.
    (12) Certain transaction costs.
    (13) Rights of fixed duration or amount.
    (d) Amortizable section 197 intangibles.
    (1) Definition.
    (2) Exception for self-created intangibles.
    (i) In general.
    (ii) Created by the taxpayer.
    (A) Defined.
    (B) Contracts for the use of intangibles.
    (C) Improvements and modifications.
    (iii) Exceptions.
    (3) Exception for property subject to anti-churning rules.
    (e) Purchase of a trade or business.
    (1) Goodwill or going concern value.
    (2) Franchise, trademark, or trade name.
    (i) In general.
    (ii) Exceptions.
    (3) Acquisitions to be included.
    (4) Substantial portion.
    (5) Deemed asset purchases under section 338.
    (6) Mortgage servicing rights.
    (7) Computer software acquired for internal use.
    (f) Computation of amortization deduction.
    (1) In general.
    (2) Treatment of contingent amounts.
    (i) Amounts added to basis during 15-year period.
    (ii) Amounts becoming fixed after expiration of 15-year period.
    (iii) Rules for including amounts in basis.
    (3) Basis determinations for certain assets.
    (i) Covenants not to compete.
    (ii) Contracts for the use of section 197 intangibles; acquired as 
part of a trade or business.
    (A) In general.
    (B) Know-how and certain information base.
    (iii) Contracts for the use of section 197 intangibles; not acquired 
as part of a trade or business.
    (iv) Applicable rules.
    (A) Franchises, trademarks, and trade names.
    (B) Certain amounts treated as payable under a debt instrument.
    (1) In general.
    (2) Rights granted by governmental units.
    (3) Treatment of other parties to transaction.
    (4) Basis determinations in certain transactions.
    (i) Certain renewal transactions.
    (ii) Transactions subject to section 338 or 1060.
    (iii) Certain reinsurance transactions.
    (g) Special rules.
    (1) Treatment of certain dispositions.
    (i) Loss disallowance rules.
    (A) In general.
    (B) Abandonment or worthlessness.
    (C) Certain nonrecognition transfers.
    (ii) Separately acquired property.
    (iii) Disposition of a covenant not to compete.
    (iv) Taxpayers under common control.
    (A) In general.
    (B) Treatment of disallowed loss.
    (2) Treatment of certain nonrecognition and exchange transactions.
    (i) Relationship to anti-churning rules.
    (ii) Treatment of nonrecognition and exchange transactions 
generally.
    (A) Transfer disregarded.
    (B) Application of general rule.
    (C) Transactions covered.
    (iii) Certain exchanged-basis property.
    (iv) Transfers under section 708(b)(1).
    (A) In general.
    (B) Termination by sale or exchange of interest.
    (C) Other terminations.
    (3) Increase in the basis of partnership property under section 
732(b), 734(b), 743(b), or 732(d).
    (4) Section 704(c) allocations.

[[Page 273]]

    (i) Allocations where the intangible is amortizable by the 
contributor.
    (ii) Allocations where the intangible is not amortizable by the 
contributor.
    (5) Treatment of certain reinsurance transactions.
    (i) In general.
    (ii) Determination of adjusted basis.
    (A) Acquisitions (other than under section 338) of specified 
insurance contracts.
    (B) Insolvent ceding company
    (C) Other acquisitions. [Reserved]
    (6) Amounts paid or incurred for a franchise, trademark, or trade 
name.
    (7) Amounts properly taken into account in determining the cost of 
property that is not a section 197 intangible.
    (8) Treatment of amortizable section 197 intangibles as depreciable 
property.
    (h) Anti-churning rules.
    (1) Scope and purpose.
    (i) Scope.
    (ii) Purpose.
    (2) Treatment of section 197(f)(9) intangibles.
    (3) Amounts deductible under section 1253(d) or Sec. 1.162-11.
    (4) Transition period.
    (5) Exceptions.
    (6) Related person.
    (i) In general.
    (ii) Time for testing relationships.
    (iii) Certain relationships disregarded.
    (iv) De minimis rule.
    (A) In general.
    (B) Determination of beneficial ownership interest.
    (7) Special rules for entities that owned or used property at any 
time during the transition period and that are no longer in existence.
    (8) Special rules for section 338 deemed acquisitions.
    (9) Gain-recognition exception.
    (i) Applicability.
    (ii) Effect of exception.
    (iii) Time and manner of election.
    (iv) Special rules for certain entities.
    (v) Effect of nonconforming elections.
    (vi) Notification requirements.
    (vii) Revocation.
    (viii) Election Statement.
    (ix) Determination of highest marginal rate of tax and amount of 
other Federal income tax on gain.
    (A) Marginal rate.
    (1) Noncorporate taxpayers.
    (2) Corporations and tax-exempt entities.
    (B) Other Federal income tax on gain.
    (x) Coordination with other provisions.
    (A) In general.
    (B) Section 1374.
    (C) Procedural and administrative provisions.
    (D) Installment method.
    (xi) Special rules for persons not otherwise subject to Federal 
income tax.
    (10) Transactions subject to both anti-churning and nonrecognition 
rules.
    (11) Avoidance purpose.
    (12) Additional partnership anti-churning rules
    (i) In general.
    (ii) Section 732(b) adjustments. [Reserved]
    (iii) Section 732(d) adjustments.
    (iv) Section 734(b) adjustments. [Reserved]
    (v) Section 743(b) adjustments.
    (vi) Partner is or becomes a user of partnership intangible.
    (A) General rule.
    (B) Anti-churning partner.
    (C) Effect of retroactive elections.
    (vii) Section 704(c) elections.
    (A) Allocations where the intangible is amortizable by the 
contributor.
    (B) Allocations where the intangible is not amortizable by the 
contributor.
    (viii) Operating rule for transfers upon death.
    (i) Reserved
    (j) General anti-abuse rule.
    (k) Examples.
    (l) Effective dates.
    (1) In general.
    (2) Application to pre-effective date acquisitions.
    (3) Application of regulation project REG-209709-94 to pre-effective 
date acquisitions.
    (4) Change in method of accounting.
    (i) In general.
    (ii) Application to pre-effective date transactions.
    (iii) Automatic change procedures.

[T.D. 8867, 65 FR 3826, Jan. 25, 2000]