California Code of Regulations › Title 18 - Public Revenues › Division 3 - Franchise Tax Board › Chapter 3.5 - Bank and Corporation Tax › Subchapter 7 - Net Income › Article 1 - Deductions › Section 24368.1 - Election to Amortize Trademark and Trade Name Expenditures

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) In General.
(1) Section
					 24368.1 provides that a taxpayer
					 may elect to treat any trademark or trade name expenditure (defined in Section
					 24368.1(b) and
					 subsection (b) of this regulation) paid or incurred during an income year
					 beginning after December 31, 1960, as a deferred expense. Any expenditure so
					 treated shall be allowed as a deduction ratably over the number of continuous
					 months (not less than 60) selected by the taxpayer, beginning with the first
					 month of the income year in which the expenditure is paid or incurred. The term
					 "paid or incurred," as used in Section
					 24368.1 and this regulation, is to
					 be construed according to the method of accounting used by the taxpayer in
					 computing net income. See Section
					 23033. An election under Section
					 24368.1 is irrevocable insofar as
					 it applies to a particular trademark or trade name expenditure, but separate
					 elections may be made with respect to other trademark or trade name
					 expenditures. See paragraph (3) of this subsection. See also subsection (c) of
					 this regulation for time and manner of making election.
(2) The number of continuous months selected
					 by the taxpayer may be equal to or greater, but not less, than 60, but in any
					 event the deduction must begin with the first month of the income year in which
					 the expenditure is paid or incurred. The number of months selected by the
					 taxpayer at the time it makes the election may not be subsequently changed but
					 shall be adhered to in computing net income for the income year for which the
					 election is made and all subsequent income years.
(3) Section
					 24368.1 permits an election by the
					 taxpayer for each separate trademark or trade name expenditure. Thus, a
					 taxpayer who has several trademark or trade name expenditures in an income year
					 may elect under Section
					 24368.1 with respect to some of
					 such expenditures and not elect with respect to the other expenditures. Also, a
					 taxpayer may choose different amortization periods for different trademark or
					 trade name expenditures with respect to which it has made the election under
					 Section 24368.1.
(4) All trademark and trade name expenditures
					 are properly chargeable to capital account for purposes of Section
					 24916(a),
					 relating to adjustments to basis of property, whether or not they are to be
					 amortized under Section
					 24368.1. However, the trademark
					 and trade name expenditures with respect to which the taxpayer has made an
					 election under Section
					 24368.1 must be kept in a separate
					 account in the taxpayer's books and records. See subsection (c) of this
					 regulation. See also Section
					 24916(h) and Reg.
					 24916(d) for adjustments to basis of property for amounts allowed as deductions
					 under Section
					 24368.1 and this
					 regulation.