- 27 -
or not they have been successful in any particular case is a
question of fact.” [Id. at 564];
(6) “Although we now hold that a taxpayer able to prove that
a particular asset can be valued and that it has a limited
useful life may depreciate its value over its useful life
regardless of how much the asset appears to reflect the
expectancy of continued patronage, we do not mean to imply
that the taxpayer’s burden of proof is insignificant.”
* * * [Id. at 566].
Subsequent to the Supreme Court’s 1993 opinion in Newark
Morning Ledger Co. v. United States, supra,9 court opinions
consistently have made similar statements and consistently have
placed a heavy burden on taxpayers seeking tax deductions
relating to intangible assets. In Ithaca Indus., Inc. v.
Commissioner, 17 F.3d 684 (4th Cir. 1994), affg. 97 T.C. 253
(1991), the Court of Appeals for the Fourth Circuit explained
that the Supreme Court’s holding in Newark Morning Ledger Co.
“subsumes the mass asset rule under a broader inquiry aimed at
determining whether the asset can be valued”. Id. at 688 n.8.
“[M]ost of the cases purporting to apply the ‘mass asset’ rule
involve evidentiary failures on the part of the taxpayer”. Id.
at 689 n.11 (quoting Houston Chronicle Publg. Co. v. United
States, 481 F.2d at 1249).
9 We note generally that in 1993 sec. 197 was added to the
Code to allow for amortization of goodwill and other intangible
assets (including customer-based intangibles) purchased after
Aug. 10, 1993. Omnibus Budget Reconciliation Act of 1993, Pub.
L. 103-66, sec. 13261(g), 107 Stat. 312, 540. Sec. 197, however,
expressly excludes most self-created intangible assets from
amortization treatment thereunder, and petitioner herein makes no
argument that it should be entitled under sec. 197, for 1994 or
any other year, to amortize any cost basis in the group
contracts.
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