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1990-40, respondent argues that the requirements of section
1.167(a)-8, Income Tax Regs., are not met under the facts of this
case.
Deductions are a matter of legislative grace. They are
allowable only if there is clear statutory authority providing
therefor. New Colonial Ice Co. v. Commissioner, 292 U.S. 435,
440 (1934).
Generally, section 167(a) allows a taxpayer to take
depreciation deductions for property used in its trade or
business. The term "property" includes intangibles such as
covenants not to compete, and the rules for the allowance of
amortization deductions for intangibles are set forth in section
1.167(a)-3, Income Tax Regs.2 Citizens & S. Corp. v.
Commissioner, 91 T.C. 463, 479 (1988), affd. per curiam 919 F.2d
1492 (11th Cir. 1990). To conclude that an intangible asset is
amortizable it must have a determinable value and a limited
useful life. Newark Morning Ledger Co. v. United States, 507
U.S. 546, 556 n.9 (1993). Because a covenant not to compete is
an intangible asset with a limited useful life it may be
amortized over the course of its life. Warsaw Photographic
2 Sec. 197, Amortization of Goodwill and Certain other
Intangibles, generally applies with respect to property acquired
after Aug. 10, 1993. See Omnibus Budget Reconciliation Act of
1993, Pub. L. 103-66, sec. 13261(g), 107 Stat. 540; 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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