Frontier Chevrolet Co. - Page 6




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               On its Federal income tax returns for the years 1994 through           
          1996, petitioner amortized the noncompetition agreement payments            
          over 15 years.  In 1999, petitioner filed a claim for refund for            
          the taxable years 1995 and 1996 on the basis that the                       
          noncompetition agreement payments should be amortized over 60               
          months, the life of the agreement.  In its amended petition,                
          petitioner claims that it is entitled to a deduction for the                
          years 1995 and 1996 for the same reasons set forth in its claim             
          for refund.                                                                 
                                     Discussion                                       
               The issue for decision is whether petitioner must amortize             
          noncompetition agreement payments to Roundtree and Mr. Stinson              
          over 15 years pursuant to section 197.                                      
               Section 197(a) provides that “A taxpayer shall be entitled             
          to an amortization deduction with respect to any amortizable                
          section 197 intangible.”  The deduction is determined by                    
          amortizing the adjusted basis of the intangible ratably over a              
          15-year period beginning with the month in which such intangible            
          was acquired.  See sec. 197(a).  An “amortizable section 197                
          intangible” is any section 197 intangible acquired by a taxpayer            
          after August 10, 1993,5 and held in connection with the conduct             


               5See Omnibus Budget Reconciliation Act of 1993, Pub. L. 103-           
          66, sec. 13261(g), 107 Stat. 540, for effective date; see also              
          Spencer v. Commissioner, 110 T.C. 62, 87 n.30 (1998), affd.                 
          without published opinion 194 F.3d 1324 (11th Cir. 1999).                   





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