TAX NEUTRALITY AND THE TAX TREATMENT OF PURCHASED INTANGIBLES**

ABSTRACT chased intangibles should not be based on Numerous IRSItaxpayer disputes about their useful lives. Indeed, for a given the amortization periods for purchased in- holding period and a given rate of growth tangibles have led to proposals for legis- of the firm, tax rates would be equated lation to establish statutory amortization across. intangible assets only if a common periods. Should Congress decide to legis- amortization period is used. That a single late in this area, this economic analysis amortization period would be neutral suggests that the simplest alternative-a across purchased intangibles of different single period for all purchased inta. durability is a surprising result, but it ngl- follows from allowing the cost of createdbles-is also correct to provide equal treat- intangibles to be expensed. ment for different types of intangibles. The next section of this paper reviews the types of intangible assets and the con-R EPRESENTATIVE Dan Rosten- troversy over the tax treatment of pur-kowski introduced his H. R. 3035 on chased intangibles. The following sectio