Newark Morning Ledger Co. v. United States, 507 U.S. 546, 20 (1993)

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Cite as: 507 U. S. 546 (1993)

Opinion of the Court

will has no determinate useful life of specific duration." Brief for United States 13. See also Richard S. Miller & Sons, Inc. v. United States, 210 Ct. Cl., at 437, 537 F. 2d, at 450 ("Goodwill is a concept that embraces many intangible elements and is presumed to have a useful life of indefinite duration"). The entire justification for refusing to permit the depreciation of goodwill evaporates, however, when the taxpayer demonstrates that the asset in question wastes over an ascertainable period of time. It is more faithful to the purposes of the Code to allow the depreciation deduction under these circumstances, for "the Code endeavors to match expenses with the revenues of the taxable period to which they are properly attributable, thereby resulting in a more accurate calculation of net income for tax purposes," INDOPCO, Inc. v. Commissioner, 503 U. S. 79, 84 (1992).13

In the case that first established the principle that goodwill was not depreciable, the Eighth Circuit recognized that the reason for treating goodwill differently was simple and direct: " 'As good will does not suffer wear and tear, does not become obsolescent, is not used up in the operation of the business, depreciation, as such, cannot be charged against it.' " Red Wing Malting Co. v. Willcuts, 15 F. 2d 626, 633 (1926), cert. denied, 273 U. S. 763 (1927). See also 5 J. Mer-13 The dissent suggests that we are usurping the proper role of Congress by seeking to "modify the per se ban on depreciating goodwill," post, at 582, n. 10. But we are doing nothing of the kind. We simply have determined that, in light of the factual record in this case, the "paid subscribers" asset is depreciable. The dissent's mistake is to assume that because the "paid subscribers" asset looks and smells like the "expectancy of continued patronage," it is, ipso facto, nondepreciable. In our view, however, whether or not an asset is depreciable is not a question to be settled by definition. "Goodwill" remains nondepreciable under applicable regulations, and we do not purport to change that fact. In interpreting those regulations, however, we have concluded that because the "paid subscribers" is an asset found to have a limited useful life and an ascertainable value which may be determined with reasonable accuracy, it is depreciable. By definition, therefore, it is not "goodwill."


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