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into ordinary income for taxable years 1991 and 1992.
Consequently, respondent determined an increase in petitioners'
taxable income.
Subsequently, however, the parties agreed that SPC-SC and
SPC-FL are entitled to deduct 85 percent of the cost of the
intangible termite and pest control contract rights.
Accordingly, the parties agreed that the amortizable bases of the
intangible contract rights must be reduced by 15 percent
(hereinafter referred to as the corrected amortizable basis).
The parties further agreed that (1) the termite contracts must be
amortized on a straight line basis over a period of 15 years, and
(2) the pest control contracts must be amortized on a straight
line basis over a period of 10 years.
The parties stipulated that as to the intangible contract
rights acquired by SPC-SC on June 1, 1987, the corrected
amortizable bases for termite and pest control contracts are
$334,406 and $660,136, respectively. The amortization deductions
allowed to SPC-SC for all taxable years up to and including 1990
totaled $108,031 for termite contracts, and $324,092 for pest
control contracts. The parties further stipulated that the
corrected amortizable bases for the termite and pest control
contracts acquired by SPC-FL on August 8, 1990, are $112,250 and
$824,415, respectively. The amortization allowed to SPC-FL for
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