- 25 -
time, they are replaced by new components, thereby
causing only minimal fluctuations and no measurable
loss in the value of the whole. * * * [Id. at 557.]
The Supreme Court explained further that customer-based
intangible assets relating to the expectancy of continued
business may be depreciated provided the taxpayer is able to
satisfy its evidentiary burden of establishing with reasonable
accuracy that the intangible asset is capable of being valued and
that the intangible asset diminishes in value over an
ascertainable period of time. Id. at 566. Whether taxpayers
satisfy this dual burden (affecting the separate tax treatment of
discrete customer-based intangible assets) constitutes a question
of fact. Id. at 564.
In Newark Morning Ledger Co., because the Supreme Court
concluded that the taxpayer therein had satisfied its burden of
establishing the value and useful life of the subscriber
contracts, the taxpayer was allowed the claimed depreciation
deductions for the value assigned to the contracts. The Supreme
Court cautioned, however, that with regard to tax deductions
relating to customer-based intangibles a taxpayer’s burden of
proof “often will prove too great to bear.” Id. at 566.
In the same Newark Morning Ledger Co. opinion, the Supreme
Court made a number of similar statements regarding a taxpayer’s
evidentiary burden with regard to customer-based intangible
assets (in the context of claimed tax deductions relating
thereto), quoting in part from earlier court opinions and
Page: Previous 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 NextLast modified: May 25, 2011