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the estimated salvage value as of the end of the useful life.
There is no salvage value for the acquired contract rights, and
the parties have stipulated the estimated useful life to be 15
years for termite contracts and 10 years for pest control
contracts. Accordingly, the only element remaining to be decided
in the instant case is the proper adjusted bases of the acquired
contract rights for purposes of amortization.
The basis on which amortization is to be allowed is defined
as the adjusted basis provided in section 1011 for determining
the gain on the sale or other disposition of the property. Sec.
167(g).32 Pursuant to section 1011(a), the adjusted basis for
determining the gain or loss from the sale or other disposition
of property is the cost of the property determined under section
1012 (with certain exceptions not material here) adjusted as
provided in section 1016. Section 1016(a)(2) provides, in
effect, that the basis of the property shall be adjusted by the
amount of any amortization previously allowed, but not less than
the amount allowable, with respect to the property. Amortization
"allowed" is the amount actually deducted by the taxpayer and not
challenged by the Commissioner. Virginian Hotel Corp. v.
Helvering, 319 U.S. 523, 527 (1943). Consequently, the greater
of the amount allowed or allowable in a prior tax year reduces
32 Sec. 167(g) was redesignated as sec. 167(c) by OBRA-90, Pub.
L. 101-508, sec. 11812(a)(1), 104 Stat. 1388, 1388-534.
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