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pleadings, exhibits, transcript of argument, and affidavits
contain the facts and information used for the purpose of ruling
on the motion herein.
B. Analysis of Section 167(c)(2). Section 167(c)(2) was
enacted as section 13261(b)(2) of the Omnibus Budget
Reconciliation Act of 1993, Pub. L. 103-66, 107 Stat. 532. It
was part of a larger package of provisions aimed at the treatment
of intangibles that was enacted in section 197.9 Under the
regimen of section 197, various intangibles are identified,
categorized, and subjected to uniform tax treatment. As part of
this larger package of rules, section 167(c)(2) was enacted to
specifically exclude leasehold interests, including subleases,
from the effect of section 197. Even though leases were removed
from the effect of section 197, by enacting section 167(c)(2)
Congress intended uniform treatment for all situations where a
tangible asset was “acquired subject to a lease”. In that
regard, section 167(c)(2) is designed to prevent taxpayers from
allocating any of the cost of acquiring tangible property to
9 Prior to the enactment of sec. 197, depreciation or
amortization of intangibles was governed by sec. 1.167(a)–(3),
Income Tax Regs., and was a source of considerable controversy
between taxpayers and the Internal Revenue Service. See Staff of
Joint Comm. on Taxation, Technical Explanation of the Tax
Simplification Act of 1993 (J. Comm. Print 1993), Title V,
Treatment of Intangibles, Amortization of goodwill and certain
other intangibles (sec. 501 of the bill and new sec. 197 of the
Code), at 147.
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