What are Section 197 intangibles associated with?

Section 197 intangibles refer specifically to certain intangible assets that are defined under the Internal Revenue Code. These include assets such as goodwill, trademarks, trade names, customer lists, and patents that are acquired in a business combination or asset acquisition. The significance of Section 197 is that it allows for the amortization of these intangible assets over a 15-year period on a straight-line basis.

Goodwill is often the most notable example of a Section 197 intangible because it represents the value derived from a company's reputation and client relationships, which cannot be easily quantified or transferred. Trademarks also fall under this category, as they represent brand identity that holds value.

In contrast, physical assets used in manufacturing, monetary investments and stocks, or real estate and property sales do not qualify as Section 197 intangibles. These assets either involve tangible items or financial instruments that are subject to different tax treatments and depreciation methods. Thus, understanding the specific nature of Section 197 intangibles helps clarify their importance in tax accounting and reporting for businesses.