Final answer:
In 2023, Olivia would properly claim an amortization expense of $3,333 for the customer list she purchased for her matchmaking business, given that she purchased it in June 2023 and the IRS specifies a 15-year amortization period for such intangible assets. Considering as option number a, b, c, d and e, option number b is correct.
Step-by-step explanation:
When a business owner, like Olivia, purchases an intangible asset such as a customer list, the cost of that asset can be spread out over the useful life of the asset through a process called amortization. For tax purposes, under the United States Internal Revenue Code, certain intangible assets are subject to amortization over a 15-year period. This goes under the provision of Section 197 which specifies the amortization of goodwill and certain other intangibles. Since Olivia purchased the customer list in June 2023, she will have half a year's worth of amortization to claim in 2023.
The yearly amortization expense for the $100,000 customer list is calculated as $100,000 divided by 15 years, which equals $6,667 per year. However, because Olivia only held the asset for half of 2023, she would claim half of the annual amount, which results in an amortization expense of $3,333 for the year 2023.