Can trademarks be depreciated [Must-Know Tips]

Last updated : Aug 12, 2022

How long do you depreciate a trademark?

You must generally amortize over 15 years the capitalized costs of "section 197 intangibles" you acquired after August 10, 1993. You must amortize these costs if you hold the section 197 intangibles in connection with your trade or business or in an activity engaged in for the production of income.

How long can a trademark be amortized?

Generally accepted accounting principles, or GAAP, require a business to amortize only intangible assets with definite lives. Because a trademark can be renewed every 10 years with the U.S. Patent and Trademark Office indefinitely, a business typically does not amortize a trademark in its accounting records.

Do trademarks have a useful life?

Trademarks have estimated useful lives that range from 2 to 40 years. Distribution networks have estimated useful lives that range from 20 to 30 years, and non-compete agreements have a 10-year contractual life.

Can a trademark be amortized tax?

Section 197 of the Internal Revenue Code (IRC) allows the capitalized cost of a trademark to be amortized and then deducted from taxable income rather deducted as an ordinary business expense.

Is trademark an asset or expense?

Trademark is an intangible asset that protects others from using a business's name, logo, or other branding items.

Can you capitalize trademarks?

Companies are allowed to capitalize costs associated with trademarks, patents, and copyrights. Capitalization is allowed only for costs incurred to defend or register a patent, trademark, or similar intellectual property successfully.

Is a trademark a fixed asset?

Intangible assets include operational assets that lack physical substance. For example, goodwill is a fixed asset, as are patents, copyrights, trademarks and franchises.

Do you depreciate a logo?

In general, logos have an indefinite lifespan. This means the value of the logo isn't amortized.

What is the life of a trademark?

Unlike patents and copyrights, trademarks do not expire after a set period of time. Trademarks will persist so long as the owner continues to use the trademark. Once the United States Patent and Trademark Office (USPTO), grants a registered trademark, the owner must continue to use the trademark in ordinary commerce.

What is the legal life of trademark?

A trademark can be protected in perpetuity if regularly monitored and properly maintained. The period of protection is ten (10) years from the date of registration and is renewable for a period of ten (10) years at a time.

Can you expense trademark costs?

Your Registered Trademark and Its Tax Implications You cannot deduct the cost of creating your trademark, but you can apply it to your formulation of the "income tax basis", which is the reference point for determining tax liability upon sale and depreciation deductions.

Can I depreciate intellectual property?

Based on this tax definition, only patents, registered designs and copyright can be depreciating assets and deducted under the capital allowance regime. Generally, deductions are available under Division 40 for the “decline in value” of IP assets owned, calculated using the prime cost method of depreciation.

Can you depreciate intangible assets?

If an intangible asset has a finite useful life, the company is required to amortize it, a process very similar to how physical assets are depreciated over time.

What expense category is trademark?

Trademarks, trade names and franchise fees will always be considered Section 197 intangibles, regardless of whether or not you incur these costs as part of an acquisition (whereas some other types of intangible assets would only be considered Section 197 intangibles if part of an acquisition).

Is a trademark a long term asset?

Also known as non-current assets, long-term assets can include fixed assets such as a company's property, plant, and equipment, but can also include other assets such as long term investments, patents, copyright, franchises, goodwill, trademarks, and trade names, as well as software.

What type of asset is trademark?

A trademark is an intangible asset, as it's nonphysical item granting a business the legal right to exclusively use a logo or other item.

What kind of asset is trademark?

Intangible assets are intellectual property that include Patents, Trademarks etc.

How do you value a trademark?

Some of the most common approaches to/methods of valuing a trademark are: (1) the income approach, which assigns a value to a trademark based on past and expected future profits of the goods/services associated with the trademark; (2) the market approach, which assigns a value based on comparisons of transactions (such ...

Are trademark costs amortized?

Usually, intangible assets are amortized over a period of their expected useful life. However, trademarks are not amortized since they retain their value forever.

Is a trademark an intangible asset?

Examples of intangible assets include computer software, licences, trademarks, patents, films, copyrights and import quotas.

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hi i'm stan muller this is crash course intellectual property and today we're talking about trademarks trademarks are everywhere and they can often be confusing so today we're going to talk about why just about everything seems to be trademarked and why trademarks are good for business mr mueller trademarks don't intersect with my life so i really don't see why we need to cover this one it's mueller and two just watch the video a trademark is any word name symbol or device used to identify and distinguish goods from those manufactured or sold by others and to indicate the source of the goods even if that source is unknown this bit about unknown sources means that you as a consumer don't usually know the person or factory that actually made the goods you buy before the industrial revolution you often knew exactly who was making your stuff and how it was made if you wanted a hammer you went to the blacksmith and you knew his name it was probably smith these days brand names assure you that you're buying the same product say toilet paper that you bought last time you went shopping you know like the stuff with the ripples seriously though getting the wrong medication because of brand name confusion or counterfeiting could be disastrous the rationale for granting legal protection for trademarks is that they're a type of property it demonstrates to the purchasing public a standard of quality and embodies the goodwill and advertising investment of its owner in other words companies expend a tremendous amount of resources to develop the product market it to customers and provide customer support and back up their product with warranties at its core trademark law functions as a consumer protection measure it prevents consumer confusion and makes it easier for consumers to select and purchase the goods and services they want for example if you go shopping for a new television you don't have to sift through dozens of products that are confusingly similar to samsung knockoffs like samsung or wamsung or sony you want the samsung maybe based on past experience or the company's reputation or even a funny ad because the law protects the manufacturer's use of the trademark you can be reasonably sure that the tv you're picking up at best buy is the tv you saw the verge reporters freaking out about at ces though trademarks are often classified as intellectual property the supreme court held in the 1879 trademark cases that congress has no power to protect or regulate trademarks under the intellectual property clause of the constitution which as you'll recall provides congress with the authority to regulate and protect copyrights and patents but this didn't stop congress from regulating trademarks they used the commerce clause of the constitution which gives them the power to regulate commerce with foreign nations and among the several states and with the indian tribes beyond trademarks there are also service marks which are very similar in that they distinguish one particular service an example of a service mark is that roaring lion at the beginning of mgm movies it's registered for motion picture production or something trade dress or product packaging is protected if it's distinctive and non-functional like the shape of a nutter butter cookie is protected trade dress what they ought to trademark is the smell some people have registered smells and we'll get to that in a minute trademarks are symbols and since human beings might use as a symbol or device almost anything that is capable of carrying meaning just about any conceivable thing can function as a trademark trademarks can be words like craft or lego logos designs like the nike swoosh aromas like there's a brand of oil for race cars that smells like cherries sounds like bong bong bong or bada or bada papa even though is a registered trademark you can register colors like ups brown or home depot orange or tiffany blue or john deere green personal names like taylor swift t swizzy's name is registered for 61 different goods and services from shoes to christmas tree ornaments even containers like the coca-cola bottle or this perfume bottle shaped like a human skull can be registered in short they can be almost anything that distinguishes the product from others and which signifies the source of the goods despite the breadth of potential trademark subject matter there are some limits on what can be a valid trademark recently a restaurant in texas asserted trademark rights in the flavor of its pizza one of the restaurant's former employees allegedly stole the recipe and opened up a competing pizza joint selling pizzas that tasted a lot like those made by his former employer the judge rejected the claim and dismissed the case finding that it is unlikely that flavors can ever be inherently distinctive because they do not automatically suggest a product source also functional product features are not protectable under trademark law pizza has only one function that's to taste delicious so there are three requirements for trademarks we just discussed the first one that a trademark has to be a symbol or device that a court or the patent and trademark office deems to qualify the second requirement is that the mark has to be used in interstate commerce and the third is that it has to identify the mark owner's goods and distinguish them from those manufactured or sold by others it has to be distinctive let's talk about trademarks and what makes them distinctive in the thought window quartz rank trademark distinctiveness along a spectrum ranging from unprotectable to highly protectable at the bottom end of the spectrum is generic generic names refer to stuff like using the word orange for the fruit or dog for the canine or cheese for cheese descriptive terms simply describe the goods and convey an immediate idea of what the product is such as break and bake for scored cookie dough suggestive marks require some imagination or perception to link them to the goods like chic for middle eastern food or fruit loops for a circular fruit flavored breakfast cereal arbitrary marks are common words used in unexpected ways apple for computers or amazon for book sales or shelf for gasoline the most distinctive marks are usually made up words fanciful marks are non-dictionary words such as google for an internet search engine or clorox for bleach or kodak for film fanciful arbitrary and suggestive marks receive automatic protection upon use because they're considered to be inherently distinctive so the owner of the break and bake mark has to show that consumers identify the product with nabisco or pillsbury or whoever makes the product i honestly don't know who makes it which isn't a good sign as to whether it's acquired secondary meaning generic terms are never entitled to protection this becomes important when trademarks are gradually assimilated into the language as common names through a process sometimes called generocide the public comes to view such names as referring to the products themselves rather than as distinguishing the source of the products as a result the name loses its protection words like escalators cel

Thanks for your comment Douglas Labelle, have a nice day.
- Jasper Karmann, Staff Member

what will happen to the EU trade marks after brexit am andre Mincha fan if you're wondering how the United Kingdom will treat trademarks registered or applied for in the European Union and what you should do about it then you're watching the right video because you're about to find out just that whether you're happy that the UK has finally gained its freedom from the tyranny of the European Union yay or if you think it's the biggest mistake ever boom or you just don't care about European politics the fact remains the same the brexit just happened the United Kingdom left the European Union and 11:00 p.m. GMT on January 31st 2020 the UK Parliament and the European Parliament have finally ratified the withdrawal agreement between the UK and the EU which means that it's not a no deal brexit so the UK will now enter into a transition period until December 31st 2020 the UK government has declared that it will not agree to any extension of this transition period and during this transition period the UK will remain part of the EU single market and customs union also unless otherwise will be provided in the withdrawal agreement EU law will continue to apply to the UK and most references to EU member states in applicable EU legislation will apply to the UK however the UK will no longer be entitled to participate in the elections decision-making and governance of EU institutions bodies offices and agencies all right so what does this all mean for EU trademarks and Trademark applications first of all if you own a European Union trademark that gets registered by December 31st 2020 so and of this year December 31st 2020 you will automatically acquire a corresponding reg and fully enforceable UK trademark at no extra charge now here's what this means now I'm shooting this video in early February of 2020 European trademarks only take a few months to register without an office option now what this means is that if you want to register your trademark into you and get a free extension of your trademark registration to the UK now is the time to do it you can still make it before December 31st of 2020 now don't tell me I didn't warn you if you wait too long because I did I just did now if your au trademark application registers on or after January 1st of 2021 you're out of luck applications that are still pending after December 31st of 2020 will not be converted into corresponding UK applications automatically now the only thing you're gonna get is a grace period until the end of September of 2021 now if you file your UK trademark application during this grace period you can claim the filing priority date back to the filing date of your EU trademark applications for example you file your au trademark on the day that trademark factory will be celebrating its ninth birthday on August 31st of 2020 right so let's say you file your au trademark on August 31st 2020 and it doesn't register in the EU by December 31st 2020 it means you have no protection of your brand in the UK unless you file your trademark application in the UK directly so let's say sometime in April of 21 you realize that whoops your brand is not only not protected in the as your competitor has applied to register your brand is their trademark in February of 2021 okay and so what this grace period does it gives you the right to file your trademark application in the UK let's say April of 2021 and claim priority of your trademark application in the UK back to the date of your EU trademark application that means that for all intents and purposes your UK application will be deemed to have been filed on August 31st 2020 in other words your UK application will be deemed to have been filed before your competitor filed their trademark in February of 2021 but really once again it would be much easier and much cheaper for you to just father EU trademark application ASAP and get it registered before December 31st 2020 this way you will get your UK trade mark registration automatically at no extra charge now if you do get the UK trademark - right from your new trademark registered before December 31st 2020 then such corresponding UK trademark will have the same renewal dates and filing priority dates as the registered EU trademark from which it derives now from that point on you would need to renew the UK trademark according to UK rules separately from the EU trade law right so your corresponding UK trademark will not be at risk of cancellation before December 31st 2020 even if you don't have any genuine use of the brand in the UK however if you continue not to use the mark in the UK your new UK trademark can then be cancelled for non use as always just starting from 2021 now so here are the action steps for you if you're a business owner if your Branagh if you already have a registered trademark in the EU relax you will be getting your UK trademark automatically all you would need to do is make sure you renew your UK trade mark at the same time as your EU trademark simply renewing your EU trademark would not renew your corresponding UK trademark okay you have a pending trademark application indeed you know keep an eye on it to make sure it registers by December 31st 2020 if it does then once again relax this new trademark will also trigger a corresponding UK trade mark registration at no extra charge now if you have a pending trademark application in vu and it doesn't register by December 31st 2020 then in order to protect your brand in the UK you would need to file a separate trademark application in the UK directly you can claim priority of your UK trade mark application back to the filing date of your EU trademark application as long as you file your UK trade mark application before the end of September of 2021 so before September 30th 2021 now if you do not have a pending trademark application in the EU but would like to protect your brand in 27 European countries and in the United Kingdom then what are you waiting for now is the time in fact we are quickly approaching the time after which it will be too late for you to jump on the bandwagon so if Europe is potentially on your radar as one of your target markets make sure you file your you trademarks ASAP and yes trademark factory can help you with that we will offer you the same deal as for other countries that is a comprehensive trademark search to determine if your brand is trademark herbal a single flat fee that will take care of the entire process from start to finish and a one out of percent money-back guarantee in case your trademark application doesn't get registered don't wait book your free call with one of our strategy advisors right now just go to trade my factory comm and fill out the form to book your call right now until then I will see you in the next video

Thanks sadicaZ your participation is very much appreciated
- Jasper Karmann

About the author

Jasper Karmann

I've studied dynamics at Mansfield University of Pennsylvania in Mansfield and I am an expert in clinical neuropsychology. I usually feel groggy. My previous job was disabled students teacher I held this position for 28 years, I love talking about gunsmithing and sake tasting. Huge fan of Jason Derulo I practice bobsleigh and collect artist trading cards.