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finance its acquisition of the Saints, petitioner relied upon
capital contributions of $20 million, a $29 million loan from
Allied Bank of Texas (Allied), and a $10 million loan from the
Mecom Group. Petitioner also assumed $11,264,129 in liabilities
and contributed approximately $231,000 from other sources.
Separate and apart from any consideration paid to the Mecom
Group, petitioner incurred acquisition expenses of $252,189 with
respect to its Superdome leasehold.
Stipulated Premises
For purpose of this case, the parties have stipulated that
the appropriate method of allocating the acquisition price is the
residual method, as illustrated by section 1.1060-1T(d),
Temporary Income Tax Regs., 53 Fed. Reg. 20739 (July 18, 1988).
With respect to the residual method, the sole class IV asset is
the Saints' NFL franchise. Of the total acquisition price, the
parties have agreed to allocate $46,132,780 to assets other than
leases and the NFL franchise. Hence, the amount of the
acquisition price remaining to be allocated is $24,362,009. The
parties have further stipulated that if any amount is to be
allocated to the Superdome leasehold, that amount will be $16
million.
OPINION
This case involves the acquisition of a professional
football team and its accompanying assets, both tangible and
intangible. At issue is whether petitioner, having purchased the
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