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Commissioner, 102 T.C. 406 (1994). As a result of the
opinion and as a result of the determination of the
Commissioner, it has been determined that the deduction
* * * claimed as an amortization deduction with respect
to amounts allocated to a subscription list included in
the intangible assets acquired in the purchase of
Ladies['] Home Journal, is disallowed in full because
the amount paid was for non-amortizable intangibles,
having an indeterminate useful life under Section 167
of the Internal Revenue Code.
We agree with petitioner. Among other things, respondent
misconstrues our holding in Meredith I regarding the contingent
nature of all of the editorial costs described above and the
resulting impact on petitioner's tax basis in the subscriber
relationships. She also disregards general principles of tax law
concerning the treatment of contingent asset acquisition costs
incurred after an asset has been disposed of or has exceeded its
useful life.
I. Meredith I Unequivocally Reasoned That Contingent Editorial
Costs Were To Be Added to the Tax Basis of the Subscriber
Relationships When They Were Incurred
Respondent posits that the post-June 30, 1989, contingent
costs do not increase petitioner's basis in the amortizable
subscriber relationships, but "instead are allocated to the basis
of going concern value or goodwill, neither of which is
amortizable". (The underlying transaction occurred prior to the
effective date of section 197, as enacted by Omnibus Budget
Reconciliation Act of 1993, Pub. L. 103-66, section 13261(a), 107
Stat. 532.)
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