Is the purchase of a license considered an intangible asset?

Question

Is the purchase of a license to use someones asset considered an intangible asset for tax purposes? If so, how many years is it amortized?

Answer 1

in order to answer these questions, it is important to define terms.

according to dictionary.com, a license is defined as

1. formal permission from a governmental or other constituted authority to do something, as to carry on some business or profession.

2. a certificate, tag, plate, etc., giving proof of such permission; official permit: a driver's license.

3. permission to do or not to do something.

4. intentional deviation from rule, convention, or fact, as for the sake of literary or artistic effect: poetic license.

5. exceptional freedom allowed in a special situation.

6. excessive or undue freedom or liberty.

7. LICENTIOUSNESS.

8. the legal right to use a patent owned by another.

–verb (used with object)

9. to grant authoritative permission or license to.

wereas the same source defines tax as:

1. a sum of money demanded by a government for its support or for specific facilities or services, levied upon incomes, property, sales, etc.

so therefore, since the liscenture fee is paid to the government for the service of providing permission, the purchase of the license is a tax in itself, and a debit, not an asset, neither tangible nor intangible.

HOWEVER, since the legal definitions of these terms vary from state to state, and government to government, you would be best served to research these terms within the government agency with which you are dealing to avoid undue legal complications.

Answer 2

It depends on what the license is for and how it was acquired, but in general, yes, it is an intangible asset and for federal tax purposes amortized over 15 years. State taxes could obviously differ.