Academic journal article Journal of Accountancy

AICPA Supports Amortization Bill, with "Necessary Changes."

Academic journal article Journal of Accountancy

AICPA Supports Amortization Bill, with "Necessary Changes."

Article excerpt

The American Institute of CPAs gave its support, subject to several changes, to legislation aimed at eliminating conflicts between the Internal Revenue Service and businesses over amortization of intangible assets. (For a description of the bill's provisions, see JofA, Oct. 91, page 26.)

In testimony before the House Ways and Means Committee, Leonard Podolin, chairman of the Institute's tax executive committee, said the AICPA "strongly supports" the bill, HR 3035, "as a continued effort to simplify the tax law." He said the bill would reduce litigation regarding intangible assets; increase the certainty of the after-tax results of operations as reported in financial statements; and enhance competition with foreign businesses (since many other countries allow a tax deduction for goodwill).

Necessary changes. However, Podolin said several "necessary changes" were needed in order for the bill to accomplish its intended purposes, and that Institute support for HR 3035 was subject to the following:

1. The bill should be revised to eliminate from its scope intangible assets not purchased as part of a trade or business.

2. Gain, as well as loss, on disposition of a section 197 intangible should be provided nonrecognition treatment. …

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