Intangible property without an ascertainable life, such as goodwill, may not be amortized. Capitalize and recover cost through depletion Most expense immediately even if it produces an NOL 15-years to use. Percentage depletion is still allowed if expensed. Depletion Methods Cost or percentage method is allowed and choice is made annually. Timber must use cost method.
Cost uses basis - units of production concept.
To prevent a taxpayer from circumventing the cost recovery dollar limitations by leasing automobiles instead of purchasing them. A taxpayer must include in gross income an inclusion amount for each taxable year for which the taxpayer leases the automobile. The dollar amount is prorated for the number of days of the lease term included in the taxable year. This prorated amount is multiplied by business use percentage.