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patronage'". Newark Morning Ledger Co. v. United States, supra
at 555-556 (citing Boe v. Commissioner, 307 F.2d 339, 343 (9th
Cir. 1962), affg. 35 T.C. 720 (1961)); Metallics Recycling Co. v.
Commissioner, 79 T.C. 730, 742 (1982), affd. 732 F.2d 523 (6th
Cir. 1984). However, because goodwill is considered not to have
a limited useful life, no amortization deductions are allowable.
Sec. 1.167(a)-3, Income Tax Regs.8; see also discussion in Newark
Morning Ledger Co. v. United States, supra at 565-566. Going-
concern value is similar to goodwill in that it reflects "the
additional element of value which attaches to property by reason
of its existence as an integral part of a going concern." VGS
Corp. v. Commissioner, 68 T.C. 563, 591 (1977). Consequently, we
must decide whether any of the amount paid for the covenant not
to compete and the secrecy agreement was a disguised payment for
nonamortizable items such as goodwill.
8Sec. 197, which provides for the amortization of certain
acquired assets, such as purchased goodwill, was added to the
Internal Revenue Code by the Omnibus Budget Reconciliation Act of
1993 (OBRA-93), Pub.L. 103-66, sec. 13261(a), (g), 107 Stat. 532,
540, and applies to property acquired after Aug. 10, 1993 (the
date of enactment). Prior to the 1993 Act, acquired goodwill and
going concern value were not amortizable, but other acquired
intangible assets were amortizable if they could be separately
identified and their useful lives determined with reasonable
accuracy. At present, sec. 197 allows taxpayers to amortize
certain acquired intangible assets over 15 years, subject to
certain exceptions. However, sec. 197 does not apply to the
assets in the instant case because they were acquired prior to
the date of enactment.
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