- 24 -
separate and distinct asset depends upon whether the putative
asset has an ascertainable and measurable value; i.e., a fair
market value that is convertible to cash. See NCNB Corp. v.
United States, 684 F.2d 285, 290 (4th Cir. 1982); Briarcliff
Candy Corp. v. Commissioner, 475 F.2d 775, 784-786 (2d Cir.
1973), revg. T.C. Memo. 1972-43. On the other hand, the Supreme
Court has observed that grounding tax status on the existence of
an "asset" would be unlikely to produce a bright-line rule "given
that the notion of an 'asset' is itself flexible and amorphous."
INDOPCO, Inc. v. Commissioner, supra at 87 n.6.
Where the facts clearly show that expenditures produced a
separate and distinct asset, we shall not hesitate to hold that
such expenditures must be capitalized on that basis. See PNC
Bancorp, Inc. v. Commissioner, 110 T.C. ___ (1998). However,
based upon the evidence before us and the existing case law, we
believe that the inquiry in this case should focus on the
duration and extent of any benefits petitioner received from its
expenditures, rather than the existence of a separate and
distinct asset.
Future Benefit
9(...continued)
previous court opinions. See Central Texas Sav. & Loan
Association v. United States, 731 F.2d 1181 (5th Cir. 1984); NCNB
Corp. v. United States, 684 F.2d 285 (4th Cir. 1982); Briarcliff
Candy Corp. v. Commissioner, 475 F.2d 775 (2d Cir. 1973), revg.
T.C. Memo. 1972-43.
Page: Previous 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 NextLast modified: May 25, 2011