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Wednesday, May 30, 2012

Johnson: Extend the Tax Life for Acquired Intangibles to 75 Years

Tax Analysts Calvin H. Johnson (Texas), Extend the Tax Life for Acquired Intangibles to 75 Years, 135 Tax Notes 1054 (May 21, 2012):

Under current law, a taxpayer may amortize the cost of intangibles acquired in the taxable acquisition of a business over a composite life of 15 years. The 15-year period is too short. .A 75-year period would reflect the economic income of the acquirer and make the tax accounting consistent with debt financing. A 15-year life reduces the effective tax rate on a taxable acquisition of intangibles to 16%, and with debt financing, the acquirer’s tax becomes negative, adding 19% of revenue to the value of the acquisition. There is no justification for a negative tax on acquisitions.  

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