On January 1, in connection with the purchase of all of the assets of Joe Swift's business, Fast, Inc. entered into a covenant not to compete with Joe for a period of five years, with an option by Joe to extend it to seven years. What is the amortization period of the covenant for tax purposes?

fifteen years

Explanation:

This agreement or covenant to not compete, should be considered a section 197 intangible asset since it was acquired with the acquisition or purchase of another company. All section 197 intangible assets must be depreciated over a 15 year period regardless of the useful life of the asset.