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can be estimated with reasonable accuracy. Sec. 1.167(a)-3,
Income Tax Regs. No deduction for depreciation is allowable with
respect to an intangible asset, the useful life of which is not
limited. Id. Under the regulation, "No allowance will be
permitted merely because, in the unsupported opinion of the
taxpayer, the intangible asset has a limited useful life. No
deduction for depreciation is allowable with respect to good
will." Id. However, an intangible asset with an ascertainable
value and a limited useful life, the duration of which can be
ascertained with reasonable accuracy, is depreciable under
section 167, notwithstanding the fact that its value is related
to the expectancy of continued patronage. Newark Morning Ledger
Co. v. United States, 507 U.S. 546, 570 (1993).
Petitioner contends that she acquired the customer lists and
that her basis in those lists was equal to the purchase price set
forth in the agreement. Thus, petitioner argues that her basis
includes the total amount due as territory repayments.
Respondent makes two counterarguments. Respondent argues
that petitioner's obligation to make territory repayments was too
contingent and cannot be included in computing petitioner's basis
in her distributorship. Thus, respondent contends that
petitioner has not established a basis in excess of actual cash
payments. Respondent also argues that petitioner did not
actually acquire the customer lists, but instead acquired
franchise rights as defined in section 1253. Respondent contends
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