Patents May Be Intangible Property Under Publication 535.

The tax treatment of patents arise when buying or selling a business with patent assets, or licensing patents because certain assets are intangible and must be amortized:

Section 197 Intangibles Defined: The following assets are section 197 intangibles and must be amortized over 180 months:

1. Goodwill;
2. Going concern value;
3. Workforce in place;
4. Business books and records, operating systems, or any other information base, including lists or other information concerning current or prospective customers;
5. A patent, copyright, formula, process, design, pattern, know-how, format, or similar item;
6. A customer-based intangible;
7. A supplier-based intangible;
8. Any item similar to items (3) through (7);
9. A license, permit, or other right granted by a governmental unit or agency (including issuances and renewals);
10. A covenant not to compete entered into in connection with the acquisition of an interest in a trade or business;
11. Any franchise, trademark, or trade name; and
12. A contract for the use of, or a term interest in, any item in this list.