Intangibles can be depreciated, says Supreme Court
Article Abstract:
The Supreme Court decision on the the Newark Morning Ledger Co case, 4/20/93, permits a taxypayer who can prove that an intangible asset could be valued and had a finite useful life to devalue it during the span of its useful life no matter how much the asset seems to manifest the expectancy of continued patronage. The case stemmed from the move of the IRS to disallow the newspaper publisher to make deductions after deeming the intangible asset undifferentiatable from goodwill. The Supreme Court noted, however, that there is no definition of 'goodwill' in the IRC. More importantly, the court observed that the issue is not whether an asset can be categorized with the concept of goodwill, but whether it can be valuated and if that value depreciates over time.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1993
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Technology need not be patented to be depreciated, when its life is limited
Article Abstract:
Court cases have not defined when depreciation of unpatented technology is allowed, but several related cases have demonstrated that depreciation and amortization deductions are allowed if a limited useful life can be established. The useful life of the secret formula for Liquid Paper Corp's correction fluid was determined in a 1983 Tax Court case. The Court determined that technological improvements in the ability of typewriters to correct mistakes would erode 90% of Liquid Paper's market by 1995, thus terminating the product's useful life. The Tax Court in the 1977 case of Los Angeles Central Animal Hospital Inc determined that the medical records of the hospital had a useful life of seven to eight years, after which the records would become outdated.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1990
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Limited liability companies: a new business form?
Article Abstract:
The limited liability company (LLC) is a hybrid business entity that combines corporate and partnership law. It enjoys the same tax advantage of pass-through treatment for income tax purposes that is available to partnerships, while at the same time enjoying the corporate benefit of limited personal liability for members. In general, an LLC is formed only after articles of organization have been submitted to the proper state authorities. In some states, the existence of an LLC is not recognized until it receives a certificate of organization. Because of the advantages it offers, the LLC is expected to become the preferred form of organization for many business. Sixteen states have already enacted LLC statutes.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1993
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