Newark Morning Ledger Co. v. United States, 507 U.S. 546, 32 (1993)

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

Souter, J., dissenting

Ledger's success or failure is solely a function of the evidentiary record. Ledger has failed.

Here, it is helpful to recall one defining characteristic of the only kind of asset Ledger claims to be entitled to depreciate: it must be an asset acquired from Booth Newspapers, Inc., upon the sale of its stock to Ledger's predecessor, Herald. If the goodwill is to be depreciated at all, in other words, it must be goodwill purchased, not goodwill attributable to anything occurring after the purchase date. It must be an expectation of continued patronage as it existed when the old Booth newspapers changed hands.

Assuming that there is a variety of goodwill that may be separately identified as an asset on the date of sale, some limitation on its useful life may be presumed. Whatever may be the force of habit, or inertia, that is valued as goodwill attributable to events occurring before the date of sale, the influence of those events wanes over time, and so must the habit or inertia by which that influence is made manifest and valued as goodwill. On the outside, the economically inert subscribers will prove to be physically mortal.5

5 While some courts have viewed goodwill as having an indefinite useful life, others have concluded that although goodwill does waste, its useful life cannot be determined with reasonable accuracy. Compare, e. g., Red Wing Malting, 15 F. 2d, at 633 (goodwill is not depreciable because it "does not suffer wear and tear, does not become obsolescent, [and] is not used up in the operation of the business"); Patterson v. Commissioner, 810 F. 2d 562, 569 (CA6 1987) (goodwill "does not waste"); Houston Chronicle Publishing Co. v. United States, 481 F. 2d 1240, 1248 (CA5 1973) (goodwill is "an ongoing asset that fluctuates but does not necessarily diminish"); Landsberger v. McLaughlin, 26 F. 2d 77, 78 (CA9 1928) (goodwill is not subject to exhaustion, wear or tear), with, e. g., Dodge Brothers, Inc. v. United States, 118 F. 2d 95, 100 (CA4 1941) (goodwill is not depreciable because of "manifest difficulties" inherent in estimating its life span); Illinois Cereal Mills, Inc. v. Commissioner, 46 TCM 1001, 1023 (1983),

¶ 83,469 P-H Memo TC (goodwill is not subject to depreciation "because [its] useful life is not susceptible of reasonable estimation").

577

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