Final answer:
Section 197 intangibles include patents, customer lists, trademarks, and goodwill, all of which are valuable business assets that contribute to a company's income potential and are amortizable over 15 years for tax purposes.
Step-by-step explanation:
The items that can be classified as Section 197 intangibles include: patents, customer lists, trademarks, and goodwill. Section 197 of the Internal Revenue Code provides for the amortization of certain intangible assets over a period of 15 years, regardless of the assets' actual useful life. These intangibles are considered crucial business assets that can contribute significantly to the income potential and value of a company. Patents protect inventions and provide the rights to exclude others from making, using, selling, or importing the patented invention.
Customer lists are valuable for the relationships and sales potential they represent. Trademarks identify and distinguish the source of goods or services and are critical for branding. Goodwill reflects the reputation, customer base, and other non-physical advantages a business possesses. These intangibles are recognized for their importance in business operations and their value upon acquisition or creation.