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Can I Write-off of Software and Intangible Assets?

Can I take a full write-down of both software and patent “intangible property” assets if the company no longer has this product for sale? The entity is an LLC fully-owned by another LLC and the parent is treated as a Subchapter S corporation.

Answer: We do not know exactly how you recorded the software and patent development costs on your Balance Sheet or whether you amortized any of those development costs, but if you have stopped selling the software, have abandoned any further development or sale, and the software programming is not saleable, then you can write-off the remaining book value of the software and related intangibles as worthless assets. Due to the general complexities of the tax rules and guidelines for capital assets, LLCs and S corps, you may nay need to consult your local business tax advisors to clarify the tax treatment of any asset write-offs; however, you can review IRS information regarding intangible asset and capital assets at the following websites:

Published: July 11, 2013
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Rick Gossett

As COO of Tarkenton Companies for more than 20 years, Rick has been responsible for business software development, unique partnerships, business educational content and consulting, and more. Rick was the originator of Tarkenton Companies’s consulting service and initially handled all of the questions himself. Prior to joining Tarkenton Companies, Rick owned and operated a private practice as a CPA. Prior to that, he was a Senior Manager at Pannell Kerr Forster in tax and audit, as well as Principal in Ernst & Young's small business advisory group.