Beer and Wine License

[BOB W]

I have a client that applied for a Beer & Wine license. How do I handle that cost? Expense or what?

This is an existing business that is expanding services to include Beer & Wine.

[jimmcg]

Have always handled purchase of beer and wine license as purchase of Sec 197 amortizable intangible.

[BOB W]

Have always handled purchase of beer and wine license as purchase of Sec 197 amortizable intangible.

OK. Over what time period and what about renewals going forward?

[ChEAr$]

I don't see the licensing fee (it's not a 'purchase' by the way) as an intangible to be
amortized, but rather an ordinary expense and put it in "taxes and licenses".

Remember one of the principles of accounting is materiality.

[BOB W]

Thanks for the feed back... Maybe I'll wait for another responder to get another opinion. I'm not sure which way to go, as you can see.................Did I mention that this is the Application for a license?

[BHoffman]

I also expense this under "License and Permit Fees"

[Uncle Sam]

Beer & Wine License

How long is the license period for?
When's the next renewal period?

[abctax]

Page 5-11 TTB (for Sole Proprietorships - but s/b applicable to all entities).
Some licenses, such as liquor licenses, may have to be amortized. See Pub 535.

As to materiality, I have one client who paid $ 30,000 for the license, 35 years ago. The annual renewal, I deduct. It currently could be sold for $ 85,000. What dollar amount are you dealing with?

[BOB W]

Page 5-11 TTB (for Sole Proprietorships - but s/b applicable to all entities).
Some licenses, such as liquor licenses, may have to be amortized. See Pub 535.

As to materiality, I have one client who paid $ 30,000 for the license, 35 years ago. The annual renewal, I deducte. It currently could be sold for $ 85,000. What dollar amount are you dealing with?

$1,250.................

[JohnH]

I'd expense it.

[BOB W]

How long is the license period for?
When's the next renewal period?

I don't know, but it is in NY.

[Uncle Sam]

Beer/Wine License

I would find out how long it's for.

I have a liquor store client whose state liquor license fee is between $ 1500-2000 for 3 years.
I amortize it straight line.

[newbie]

Is he "buying" it from the former owner or is he applying to the state and federal for the license and paying the annual fee?

[S T]

Client

I have a client that part of the purchase cost was allocated to Beer/Wine License and that was amortized - it was sizeable in cost i.e. something like $ 30,000 - A renewal fee each year thereafter which is usually less than $ 1,500

Then I have had clients that go to ABC and make their application and pay the fee which is usually under $ 3,000 for one year and those I expense.

Sandy

[BOB W]

Is he "buying" it from the former owner or is he applying to the state and federal for the license and paying the annual fee?

He is not buying it from a seller. He started a business early 2009 and now he is adding Beer & Wine as an additional offering.

I went ahead and expensed it as it was a small amount.