- 5 -
respect to three intangible assets acquired in its purchase of
LHJ: (1) A noncompetition agreement; (2) an employment
relationship; and (3) the subscriber relationships.
The parties stipulated in Meredith I that the useful life of
the subscriber relationships was 42 months. In addition, the
parties stipulated that the actual editorial costs incurred by
Meredith through June 30, 1991, stemming from its assumption of
FMI's fulfillment obligation, were as follows:
Present Value
FYE Editorial Costs Discounted at 14%
6/30/86 $8,324,660 $8,056,386
6/30/87 7,827,573 6,866,292
6/30/88 2,869,118 2,207,693
6/30/89 1,462,368 987,057
6/30/90 807,267 477,967
6/30/91 321,780 167,122
21,612,766 18,762,517
On March 14, 1994, this Court issued its Opinion in Meredith
I, and on June 16, 1994, a decision was entered. In the Opinion,
we decided that the assumed editorial costs composed part of the
purchase price of the subscriber relationships, but that the
costs could not be included in petitioner's basis of that asset
as of the acquisition date due to their contingency. Instead, we
held that such costs (plus the present value of tax savings
resulting from the amortization of such costs) must be added to
the "basis of the subscriber relationships in the years in which
* * * [they] are incurred". Meredith Corp. & Subs. v.
Commissioner, supra at 455. The Court then permitted those costs
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
Last modified: May 25, 2011