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The parties agree that the acquired contract rights must be
amortized using the straight line method.31 Under
30(...continued)
enactment.
31 Numerous obsolete provisions in sec. 167 were eliminated by
the Omnibus Budget Reconciliation Act of 1990 (OBRA-90),
effective for property placed into service after Nov. 5, 1990
(the effective date). OBRA-90, Pub. L. 101-508, sec. 11812(a),
104 Stat. 1388, 1388-534. Specifically, sec. 167(b) was
rewritten and sec. 167(c) was stricken. OBRA-90, sec. 11812(a).
The legislative history, however, indicates that such changes
were “not intended to change in any respect the present-law rules
relating to the allowable methods of depreciation." H. Rept.
101-894, at 36 (1990). Pre-OBRA-90, sec. 167(b) and (c) provides
the allowable method of depreciation for the assets in issue in
the instant case because they were placed into service prior to
the effective date of the amendments made by OBRA-90.
Prior to OBRA-90, pursuant to sec. 167(b) and 167(c), the
cost of intangible property was recovered using the straight line
method of depreciation. Former sec. 167(b) and (c) read as
follows:
(b) Use of Certain Methods and Rates.--For taxable
years ending after December 31, 1953, the term
"reasonable allowance" as used in * * * [section
167(a)] shall include (but shall not be limited to) an
allowance computed in accordance with regulations
prescribed by the Secretary, under any of the following
methods:
(1) the straight line method,
(2) the declining balance method, using a rate not
exceeding twice the rate which would have been
used had the annual allowance been computed under
the method described in paragraph (1),
(3) the sum of the years-digits method, and
(4) any other consistent method productive of
an annual allowance which, when added to all
allowances for the period commencing with the
taxpayer's use of the property and including
(continued...)
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