- 47 -
CMO A-3 12,511,453
CMO C-4 623,683
Total 428,391,551
II. Favorable Financing Intangible Assets Have a Reasonably
Estimable Useful Life As of January 1, 1985
To amortize favorable financing, a taxpayer must show that
the intangible assets have limited useful lives, the duration of
which may be ascertained with reasonable accuracy. Section
1.167(a)-3, Income Tax Regs., provides:
� 1.167(a)-3. Intangibles.
If an intangible asset is known from experience or
other factors to be of use in the business or in the
production of income for only a limited period, the
length of which can be estimated with reasonable
accuracy, such an intangible asset may be the subject
of depreciation allowance. Examples are patents and
copyrights. An intangible asset, the useful life of
which is not limited is not subject to the allowance
for depreciation. * * *
“A taxpayer may establish the useful life of an asset for
depreciation based upon his own experience with similar property,
or, if his own experience is inadequate, based upon the general
experience in the industry.” Citizens & S. Corp. & Subs. v.
Commissioner, 91 T.C. at 500 (citing section 1.167(a)-1(b),
Income Tax Regs.); Banc One Corp. v. Commissioner, 84 T.C. 476,
499 (1985) (citing section 1.167(a)-1(b), Income Tax Regs.),
affd. without published opinion 815 F.2d 75 (6th Cir. 1987). The
taxpayer is not required to prove the precise useful life for
purposes of depreciation--a “‘reasonable approximation’” of the
useful life is sufficient. Citizens & S. Corp. & Subs. v.
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