amortize


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Amortization

1. A tax deduction for the gradual consumption of the value of an asset, especially an intangible asset. For example, if a company spends $1 million on a patent that expires in 10 years, it amortizes the expense by deducting $100,000 from its taxable income over the course of 10 years. It is often used interchangeably with depreciation, which technically refers to the same thing for tangible assets.

2. The act of repaying a loan in regular payments over a given period of time.

amortize

To write off gradually and systematically a given amount of money within a specific number of time periods. For example, an accountant amortizes the cost of a long-term asset by deducting a portion of that cost against income in each period. Likewise, an investor will usually amortize the premium each year on a bond purchased at a price above its principal.
References in periodicals archive ?
With respect to bonds acquired before October 23, 1986, a taxpayer who elected to amortize takes an annual itemized interest expense deduction.
Any corporation that purchases or otherwise acquires intangible assets must answer the question of whether to amortize them.
Accounting problem: Should a tax benefit related to tax-deductible goodwill in excess of book goodwill be included in income from continuing operations in the period of enactment if the entity expects to elect to amortize goodwill retroactively for tax purposes?
The EITF reached a consensus that the inter used to amortize PVP should be the liability or contract rate to be consistent with FASB Statements nos.
Danaher won a settlement that allowed it to amortize its costs, but the industry remained concerned that the Service would use INDOPCO and the TAM to disallow deductions on consulting fees of any kind in other cases.
But recently, the 10th Circuit Court of Appeals in Colorado National Bankshares (10th Cir., 2/17/93) affirmed the Tax Court's decision in Newark while ruling on Colorado's ability to amortize core deposits obtained in an acquisition of several banks.
The bondholder does not have to amortize the market discount that arises from all tax-exempt bonds purchased prior to May 1, 1993.
* Almost all of the plan participants are inactive, in which case the employer should amortize the transition amount over the average remaining life expectancy of the participants.
461(g)(1) requires a cash-method taxpayer to capitalize and amortize prepaid interest.
The taxpayer then attempted to amortize the expenditures over 60 months.
The 10-year, fixed rate refinance loan amortizes on a 30-year schedule.
The 7-year acquisition loan amortizes on a 30-year schedule.