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had reviewed and "taken no exception" to the settlement reached
by the parties for Meredith's TYE 1989.
Meredith timely filed a Federal income tax return for its
TYE 1990 prior to the Court's decision in Meredith I. Based on
Meredith I, petitioner later claimed an ordinary deduction for
that year of $1,555,428 ($807,267 editorial costs plus tax
savings) relating to the acquisition of the subscriber
relationships. On August 29, 1995, respondent issued a statutory
notice of deficiency to Meredith in which, among other
adjustments to income, Meredith's claimed deduction of $1,555,428
for its TYE 1990 was disallowed completely, and a deficiency of
$744,852 was determined.
Discussion
We must adjudge the proper tax treatment for contingent
editorial costs and correlated tax savings that were allocable to
the basis of the subscriber relationships in Meredith's TYE 1990.
The issue of whether these costs should be allocated to the basis
of that particular asset was resolved affirmatively in Meredith
I. Meredith Corp. & Subs. v. Commissioner, 102 T.C. at 455.
However, the subscriber relationships were completely amortized
after the end of their stipulated 42-month useful life.
In Meredith I, this Court established a methodology for
determining Meredith's tax basis in its subscriber relationships.
Critical to this method--and the current imbroglio--was our
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