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In Meredith I, we reasoned that contingent acquisition costs
incurred through TYE 1991 were to be added to the cost basis of
the subscriber relationships when they became fixed, and we held
only that those costs attributable to Meredith's TYE 1986 and TYE
1987 were amortizable over whatever remained of the 42-month
useful life ending June 30, 1989. We did not address the
deductibility of editorial costs incurred in any year after TYE
1987 because such years were not before the Court.
III. Contingent Acquisition Costs Attributable to Fully Amortized
Assets Are Deductible as Incurred
Furthermore, the expiration in mid-1989 of the useful life
of the subscriber relationships does not foreclose a deduction
for those editorial costs incurred by Meredith during subsequent
taxable years. General tax law principles enounced in
regulations and case law provide that contingent asset
acquisition costs that become fixed after the relevant asset is
fully amortized are deductible as they are incurred.
Section 1.338(b)-3T, Temporary Income Tax Regs., 51 Fed.
Reg. 3592 (Jan. 29, 1986), as adopted in T.D. 8072, 1986-1 C.B.
111, concerns the treatment of adjustments to adjusted grossed-up
basis (AGUB) for contingent events that occur after the close of
a new target's first taxable year in certain stock acquisitions.
If an acquisition date asset has been disposed of, or fully
depreciated, amortized, or depleted before a contingent amount is
taken into account in determining AGUB, the contingent amount
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