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franchise, trademark, or trade name is not treated as the sale or
exchange of a capital asset, then any single payment in discharge
of a principal sum agreed upon in the transfer agreement shall be
deducted ratably by the payor over a period of 10 years or the
period of the transfer agreement, whichever is shorter.
In Jefferson-Pilot, the taxpayer's subsidiary purchased
three radio stations, and the taxpayer sought a deduction under
section 1253(d)(2) for a portion of the purchase price, which it
claimed was attributable to Federal Communications Commission
(FCC) broadcast licenses transferred pursuant to the sale. We
concluded that the FCC licenses constituted franchises under
section 1253, and a ratable portion of the purchase price
attributable to the licenses was deductible under section
1253(d)(2). We found that the FCC had retained the right to
disapprove of any assignment of the licenses, as well as the
right to prescribe standards of quality for broadcasting services
18(...continued)
(2) Other payments.--Any amount paid or incurred on
account of a transfer, sale, or other disposition of a
franchise, trademark, or trade name to which paragraph
(1) [sec. 1253(d)(1)] does not apply shall be treated
as an amount chargeable to capital account.
(3) Renewals, etc.--For purposes of determining the
term of a transfer agreement under this section, there
shall be taken into account all renewal options (and
any other period for which the parties reasonably
expect the agreement to be renewed).
Omnibus Budget Reconciliation Act of 1993, Pub. L. 103-66, sec.
13261(c), 107 Stat. 312, 539.
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