Professional sports franchises amortizable under Sec. 197.
AJCA Section 886 extends the 15-year recovery period under Sec. 197 to professional sports franchises and any intangible acquired in connection with the acquisition of the franchise (including player contracts).Thus, it repeals the special rules under Sec. 1245(a)(4) for player contracts and makes other conforming changes to the statute.
This provision is generally effective for property acquired after Oct. 22, 2004. The amendment to Sec. 1245(a)(4) applies to franchises acquired after Oct. 22, 2004.
Because the Service viewed the professional sports franchise and associated media rights as having no ascertainable useful life, considerable controversy arose over allocating the purchase price of these franchises. This was particularly the case in recent years, when a disproportionate value in the transactions was allocated to the franchise and media rights, rather than the player contracts. This provision eliminates this controversy and provides a uniform treatment.
FROM JANE ROHRS, WASHINGTON, DC
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|Publication:||The Tax Adviser|
|Date:||Jan 1, 2005|
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