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SUPREME COURT DECISION ALLOWS DEDUCTIONS OF INTANGIBLE ASSETS ACQUIRED IN TAKEOVER, COOPERS & LYBRAND SAYS

 WASHINGTON, April 20 /PRNewswire/ -- The Supreme Court's decision today in Newark Morning Ledger Co. vs. U.S. is a victory for the taxpayer, according to Coopers & Lybrand. The ruling clarifies that a company acquiring another business can take a tax deduction for certain "intangible" assets acquired in the takeover. The decision permits the company to take depreciation deductions for the value of customer subscription lists acquired in connection with the takeover of several newspapers.
 "This decision will end a great deal of uncertainty and eliminate IRS claims that amounts paid or these assets are always part of goodwill and nondeductible. It also brings the tax law more in line with financial accounting principles," notes Peter Scott, director for IRS policies and practice and a partner with Coopers & Lybrand's National Tax Office. "These accounting rules require the amortization of identifiable intangibles with determinable values and lives that are acquired when one business purchases another. Scott, former acting chief counsel for the IRS, adds, "It seems appropriate that the same rules should apply to tax law."
 The law must still be clarified on other intangible assets, according to Scott. "Not all customer-based intangible assets are capable of separate valuation and determination of useful lives," he says, "and disputes will continue to arise as to whether the taxpayer can prove its conclusions. But this is definitely good news for taxpayers."
 Pamela J. Pecarich, a Coppers & Lybrand partner and director of tax policy, notes, "The Supreme Court's decision in Newark Morning Ledger is part of the solution, but many taxpayers may still want legislation to clear up the remaining disputes over intangibles between companies and the IRS. Pending legislation would allow companies to amortize over a 14-year period such assets as goodwill, licenses, covenants not to compete, and franchises or trademarks. Intangible asset simplification has been the centerpiece of previous attempts toward reaching the elusive goal of tax simplification. This legislation in its current form, which was revenue neutral before the Supreme Court decision, should now be scored as a `revenue raiser.' This may make legislation on intangibles more attractive to tax writers facing difficult decisions on funding sources."
 One of the world's leading professional firms, Coopers & Lybrand provides services for enterprises in a wide range of industries. The firm offers its clients the expertise of more than 16,000 professionals and staff in offices acted in 101 U.S. cities and more than 66,000 people in 120 countries worldwide.
 -0- 4/20/93
 /CONTACT: Dave Nestor, 212-536-2965, or Steven Woolf, 202-822-5561, both for Coopers & Lybrand/


CO: Coopers & Lybrand ST: New York IN: FIN SU:

SH-SM -- NY080 -- 8143 04/20/93 13:50 EDT
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Date:Apr 20, 1993
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