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Under section 1060, assets are divided into four classes.
Class I assets consist of cash, demand deposits, and like
accounts in banks, savings and loan associations, and other
depository institutions. Class II assets consist of certificates
of deposit, Federal securities, readily marketable stock and
securities, and foreign currency. Class IV assets are intangible
assets in the nature of goodwill and going-concern value. Class
III assets are all assets that are not class I, class II , or
class IV assets, including accounts receivable, equipment,
buildings, land, and covenants not to compete. Sec.
1.1060-1T(a)(1), (b)(1), (d), Temporary Income Tax Regs., 53 Fed.
Reg. 27039-27040 (July 18, 1988). The total consideration is
allocated to class I assets in an amount equal to each asset's
face value. The remaining consideration is then allocated to
class II assets in proportion to the fair market value of each
class II asset. The remaining consideration is then allocated to
class III assets in an amount equal to the fair market value of
each class III asset. Any residue is allocated to class IV
assets. Sec. 1.1060-1T(d), Temporary Income Tax Regs.
The 1975 Lease is a class III asset. Sec. 1.1060-1T(d),
Temporary Income Tax Regs. Moreover, the parties have stipulated
that the sole class IV asset consists of the team's NFL
franchise. Hence, the NFL franchise is the sole residual asset.
It is well settled that "the cost of acquiring a * * *
[lease] is a capital expenditure, recoverable through
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