If you did not acquire the software in conjunction with the purchase of a business, it may not qualify under Section 197. I apologize for the misunderstanding.
Most computer software is not a section 197 intangible and can be depreciated, even if acquired in connection with the acquisition of a business, if it meets all of the following tests.
- It is readily available for purchase by the general public,
- It is subject to a nonexclusive license and
- It has not been substantially modified.
If the software meets the tests above, it may also qualify for the section 179 deduction and the special depreciation allowance. If you can depreciate the cost of computer software, use the straight-line method over a useful life of 36 months (per IRS Pub 946 Intangible Property).
In this case, choose "Other Property" >> "Other Asset Type" instead of "Amortizable Intangibles" under Assets in TurboTax. You will need to enter the useful life of 3 years (36 months). Section 179 deduction is available for computer software, which allows you to write off the entire purchase price in the first year. This option is limited to your business profit for the year.
If the software doesn't meet the above tests, enter it as Computer (software) >> Computer software. Again, you'll have the option to take Section 179, again limited to your business profit for the year. The useful life defaults to 5 years for computer software.
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