If the partnership completely disposes of the trade or business for which the costs are incurred (in the case of startup expenses) or liquidates (in the case of organizational expenses) before the 180-month period ends, any
unamortized costs are deductible at the time of the disposition or liquidation.
But they chose to amortize the retrofit of the space over 10 years, pledging to pay all unamortized costs if they do not renew after the initial seven-year term (which is big $$!).
Now, some tenants will sign a 10-year lease but insist on an early termination clause, perhaps after seven years, again paying the unamortized costs. It amounts to the same thing--seven years "in the bank" and a renewal more likely than not.
The company, Centre Tech III, had requested $13,582 to pay for
unamortized costs of refinishing the property and the unamortized balance of a real estate commission.
Comments are also requested on the treatment of
unamortized costs in the event of certain events (e.g., liquidation) prior to the expiration of the amortization period.
If possible, the landlord should negotiate a cancellation penalty from the tenant, e.g., all
unamortized costs for tenant improvements and real estate commissions.
The $7.2 million impairment expense reflects
unamortized costs associated with the acquisition, development and implementation of the system.
If one or more of these indications imply that the fair value of a film is less than its
unamortized costs, a determination of fair value, based on estimated future exploitation costs, should be made.
For acquired film libraries, an entity should disclose the amount of remaining
unamortized costs, the method of amortization, and the remaining amortization period.
The remaining costs stay on the studio's balance sheet as
unamortized costs. Say a film makes five million in its first year of release.
If adjusted
unamortized costs capitalized within a cost center exceed the cost center ceiling, the excess is charged to expenses and separately disclosed during the period it occurs.
The ability to deduct, in full, the
unamortized costs of a package design in the year of disposal or abandonment certainly outweighs the "benefit" of the shorter amortization period available under the pool-of-cost method.
