574
Souter, J., dissenting
in any event, however, since its expert has failed to furnish the basis for taking the second.
A
Ledger would have us scrap the accepted and substantive definition of "goodwill" as an expectation of continued patronage, in favor of a concept of goodwill as a residual asset of ineffable quality, whose existence and value would be represented by any portion of a business's purchase price not attributable to identifiable assets with determinate lives. Goodwill would shrink to an accounting leftover. See id., at 19, 29-30 (relying on accounting standards).
In accommodating Ledger on this point, see ante, at 565, n. 13, the Court abandons the settled construction of a regulation more than 65 years old,2 see T. D. 4055, VI-2 Cum.
2 The current intangible asset regulation can be traced back to Treasury Regulation 45, issued in 1919, which provided that there could be no deduction "in respect of good will" under the general depreciation provision of the Revenue Act of 1918 because goodwill was an example of an asset that did not have a useful life "definitely limited in duration." T. D. 2831, 21 Treas. Dec. 214, Art. 163. The Commissioner dropped the reference to goodwill for a few years, in response to attempts by distillers and brewers to depreciate goodwill made obsolete by the adoption of the Eighteenth Amendment. See T. D. 2929, 1 Cum. Bull. 133 (1919); see also T. D. 3146, 23 Treas. Dec. 402, Art. 163 (1920) (reflecting this change). The first Court of Appeals to address the subject, however, held that goodwill could not be depreciated under the Revenue Act of 1918 because it was not susceptible to exhaustion or wear and tear, as required by the statute. Red Wing Malting Co. v. Willcuts, 15 F. 2d 626 (CA8 1926), cert. denied, 273 U. S. 763 (1927). Shortly after that decision, the Commissioner amended the intangible asset regulation by adding the following prohibition: "No deduction for depreciation, including obsolescence, is allowable in respect of good will." T. D. 4055, VI-2 Cum. Bull. 63 (1927). It has remained there ever since. See, e. g., Treas. Regs. 77, Art. 203 (Revenue Act of 1932); Treas. Regs. 86, Art. 23(l)-3 (Revenue Act of 1934); Treas. Regs. 94, Art. 23(l)-3 (Revenue Act of 1936); Treas. Regs. 103, § 19.23(l)-3 (Internal Revenue Code of 1939); 26 CFR § 1.167(a)-3 (1961) (Internal Revenue Code of 1954).
Although Red Wing Malting provoked a Circuit split, this Court resolved the conflict a few years later by deciding, in line with the Commis-
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