Agreements not to compete, lists, contracts, and expirations are sometimes confused with goodwill, which is not depreciable. Therefore, you must be able to determine their value separately from the value of any goodwill that goes with the business. If you can depreciate the cost of a patent or copyright, you can use the straight line method over the useful life. The useful life of a patent or copyright is the lesser of the life granted to it by the government or the remaining life. If it becomes valueless before the end of its useful life, you can deduct in that year any of its remaining cost or other basis.
Computer software includes all programs designed to cause a computer to perform a desired function.
Computer software also includes any data base or similar item in the public domain and incidental to the operation of qualifying software. Generally, you can depreciate software over 36 months. However, if you acquired the software in connection with the acquisition of a substantial portion of a business, you can depreciate it over 36 months only if it meets all the following requirements. It is readily available for purchase by the general public. It is not subject to an exclusive license.