Wednesday, May 30, 2012
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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