Stellar Corporation purchased all of the assets of Bellavia Company as of January 1 this year for $1 million. Included in the assets acquired are the following intangible assets:AssetUseful LifeCostPatent10 year$120,000Covenant not to complete3 years30,000GoodwillIndefinite300,000What is Stellar's maximum amortization deduction for the year?
What will be an ideal response?
The assets are Sec. 197 acquisition-related intangibles so regardless of their legal or economic lives, they must be amortized over 15 years.
| Patent $120,000/15 | $8,000 |
| Covenant not to compete $30,000/15 | 2,000 |
| Goodwill $300,000/15 | 20,000 |
| Total amortization deduction | $30,000 |
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