Answer all questions clearly What difference does it make for income tax purposes whether an intangible asset is (1) acquired in connection with a business acquisition, (2) acquired bythe purchase of an individual asset (e.g., a patent), or (3) created internally? Explain.(1) An intangible asset is acquired in connection with a business acquisitionO A. Intangible assets acquired in connection with the purchase of a trade or business are Sec. 174 intangibles, amortizable ratably over a 39-year period.Gain on disposition will be given Sec. 1245 treatment, but a loss on disposition is not deductible if other intangibles acquired in the same assetpurchase are retained.O B. Intangible assets acquired in connection with the purchase of a trade or business are Sec. 197 intangibles, amortizable ratably over a 15-year period.Gain on disposition will be given Sec. 1231 treatment, but a loss on disposition is not deductible if other intangibles acquired in the same assetpurchase are retained.OC. Intangible assets acquired in connection with the purchase of a trade or business are Sec. 195 intangibles, amortizable ratably over a 27.5-yearperiod. Gain on disposition will be given Sec. 1231 treatment, but a loss on disposition is not deductible if other intangibles acquired in the sameasset purchase are retained.D. Intangible assets acquired in connection with the purchase of a trade or business are Sec. 197 intangibles, amortizable ratably over a 20-year period.Gain on disposition will be given Sec. 1245 treatment, but a loss on disposition is not deductible if other intangibles acquired in the same assetpurchase are retained.(2) An intangible asset is acquired by the purchase of an individual asset (e.g., a patent)O A. Intangibles acquired by the purchase of an individual asset are subject to amortization under Sec. 174 intangibles, amortizable ratably over a 39-yearperiod.O B. Intangibles acquired by the purchase of an individual asset are subject to amortization under Sec. 195 intangibles, amortizable ratably over a27.5-year period.OC. Intangibles acquired by the purchase of an individual asset are subject to amortization only if they have both a definite and limited life (e.g., aninternally created patent with a 17-year useful life).O D. Intangibles acquired by the purchase of an individual asset are subject to amortization under Sec. 197 intangibles, amortizable ratably over a 20-yearperiod.(3) An intangible asset is created internallyO A. Internally created intangibles are subject to amortization under Sec. 174 intangibles, amortizable ratably over a 39-year period.O B. Internally created intangibles are subject to amortization under Sec. 197 intangibles, amortizable ratably over a 15-year period.OC. Internally created intangibles are subject to amortization only if they have both a definite and limited life, (e.g., an internally created patent with a20-year useful life).O D. Internally created intangibles are subject to amortization only if they have both a definite and limited life, (e.g., an internally created patent with a17-year useful life).

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Intangible Assets
The examples for the intangible assets are goodwill, copyright, patent, francize,…