||2001 Tax Year
A ratable deduction for the cost of certain intangible property
over the period specified by law. Examples of costs that can be
amortized are goodwill, agreement not to compete, and research and
mining exploration costs.
Property used in the conduct of a trade or business, such as
business machinery and office furniture.
Generally, everything you own for personal purposes or investment
is a capital asset. This includes your home, personal car, or stocks
and bonds. It does not include inventory or depreciable property.
These are costs that must be added to (increase the basis of) your
business investments or your capital assets.
Adding costs, such as improvements, to the basis of assets.
Yearly deduction allowed to recover your investment in minerals in
place or standing timber. To take the deduction, you must have the
right to income from the extraction and sale of the minerals or the
cutting of the timber.
Ratable deduction allowed over a number of years to recover your
basis in property that is used more than one year for business or
income producing purposes.
Fair market value (FMV):
FMV is the price at which property would change hands between a
buyer and a seller, neither having to buy or sell, and both having
reasonable knowledge of all necessary facts.
Going concern value:
Going concern value is the additional value of a trade or business
that attaches to property because the property is an integral part of
a going concern. It includes value based on the ability of a business
to continue to function and generate income even though there is a
change in ownership.
Goodwill is the value of a trade or business based on expected
continued customer patronage due to its name, reputation, or any other
Property that cannot be perceived by the senses such as goodwill,
patents, copyrights, etc.
Depreciable tangible personal properties within the same General
Asset Class in Revenue Procedure 87-56 or Product Class in the
Standard Industrial Classification Manual. See
Personal property under Like Property in chapter
1 of Publication 544
for detailed information.
Items of property with the same nature or character. The grade or
quality of the properties does not matter. Examples are two vacant
plots of land.
Property used for personal purposes, such as a home or family car.
Property, such as machinery, equipment, or furniture, that is not
Land and generally anything erected on, growing on, or attached to
land, for example, a building.
Amount of depreciation or section 179 deduction that must be
reported as ordinary income when property is sold at a gain.
Section 179 deduction:
This is a special deduction allowed against the cost of certain
property purchased for use in the active conduct of a trade or
Section 197 intangibles:
Certain intangibles held in connection with the conduct of a trade
or business or an activity entered into for profit, including
goodwill, going concern value, patents, copyrights, formulas,
franchises, trademarks, and trade names.
This is property that can be seen or touched, such as furniture and
The part of the sales price treated as interest when an installment
contract provides for little or no interest.
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