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    Intangible Assets: Appraisal on purchase, abuse, stuffing

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    Intangible assets are typically amortized over a 15 year period compared to 5- and 7- year assets. Can anyone see how a taxpayer might want assets appraised upon purchase? Any potential for abuse? When does "stuffing" become evasion as opposed to avoidance?

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    Solution Preview

    With five and seven year assets, having them valued at more rather than less will provide more depreciation for a company. Most companies would be happy with more expense and less income tax, and an appraisal of purchased assets could be the answer.

    But consider a 39 year asset consisting of a building used in production. In these economic times, the value of a commercial building might be overstated. Using the value ...

    Solution Summary

    This 276 word solution clearly explains how there is the potential for abuse in valuing assets on purchase. Several examples explain the potential. The anti-stuffing rule is referenced to a code section with further explanation. Additionally, the solution provides a link to an article that provides evidence on the topic and goes into more detail.