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posted Feb 16, 2020 2:54:52 AM

What happens to unused amortization of intangible property when business closes?

What happens to unused amortization of an intangible asset (goodwill) when my business closes? This is for an S Corp.
I purchased an intangible asset in 2007 for 50,000 and have been amortizing it over 15 years ($3,333) per year, I have 2 years left. I closed business at the end of 2019. Can I use the additional $6,666 of amortization in 2019?
If not can I continue to submit a 1120-s for the next two years for this business and get a loss on my K-1?

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1 Replies
Expert Alumni
Feb 16, 2020 5:28:45 AM

Yes, you recognize the unamortized portion of an intangible as a loss in the year the business closed.

 

In TurboTax, you indicate that you disposed of the asset on the date the business closed, and the proceeds were "0" and the cost basis is the unamortized balance.

 

See this section of IRS Publication 535 for more information on the disposition of intangible assets.