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Section 167(a), in general, allows a taxpayer to amortize
intangible assets over their useful lives.7 Citizens & S. Corp.
v. Commissioner, 91 T.C. 463, 470 (1988), affd. per curiam 919
F.2d 1492 (11th Cir. 1990); sec. 1.167(a)-3, Income Tax Regs.
The standard for deciding whether an intangible is depreciable is
that such an asset must have an ascertainable value and a limited
useful life, the duration of which can be determined with
reasonable accuracy. Newark Morning Ledger Co. v. United States,
507 U.S. 546, 556 n.9 (1993). A covenant not to compete
constitutes an intangible asset that has a limited useful life
and, therefore, may be amortized over its useful life. Warsaw
Photographic Associates, Inc. v. Commissioner, 84 T.C. 21, 48
(1985); O'Dell & Co. v. Commissioner, 61 T.C. 461, 467 (1974).
Conversely, goodwill is the aggregate value of the
relationships and reputation developed by a business with its
present and potential customers and associates over a period of
time. It has been described as the "'expectancy of continued
7Sec. 167(a), in particular,
SEC. 167(a). General Rule.--There shall be allowed
as a depreciation deduction a reasonable allowance for
the exhaustion, wear and tear (including a reasonable
allowance for obsolescence)--
(1) of property used in the trade or
business, or
(2) of property held for the
production of income.
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