I sell custom made software to C-Corp (uses cash accounting). C-Corp depreciates the software BEFORE it pays me. Can C-Corp depreciate the software before it pays for it?

[veadash]

I am planning to sell the software to the C-Corp.  The software is custom made, not off-the-shelf one, so it will be entirely depreciated within 3 years.  Under the IP assignment agreement, the C-Corp must pay for the software in 1 payment within 5 years - after full depreciation.  The C-Corp uses cash accounting method.  So, do I get it right that the C-Corp: (1) may depreciate the software before it pays for it; and (2) will not pay any tax, which will relate to this transaction?

[itonewbie · Accepted solution]

This forum is only open to tax professionals and there is no need to spam the board with multiple posts asking the same question.

For consumer questions, you may like to post it on the TurboTax Community at https://ttlc.intuit.com/community/file-with-turbotax/discussion/03/303 or consult your tax advisor.

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