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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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