Academic journal article Journal of Accountancy

10th Circuit Spurns Newark Morning Ledger

Academic journal article Journal of Accountancy

10th Circuit Spurns Newark Morning Ledger

Article excerpt

While the U.S. Supreme Court is deliberating arguments it heard last November in Newark Morning Ledger (945 F.2d 562, 3rd Cir., 1991) regarding the ability to amortize acquired intangible assets, there's fresh evidence other courts will not embrace the radical legal formulation adopted by the U.S. Court of Appeals for the 3rd Circuit. That appellate court reversed the Tax Court decision and essentially held intangibles could not be amortized if they were acquired in conjunction with the sale of a business as a going concern (see Tax Briefs, JofA, Dec. 91, page 12).

Colorado National Bankshares. But recently, the 10th Circuit Court of Appeals in Colorado National Bankshares (10th Cir., 2/17/93) affirmed the Tax Court's decision in Newark while ruling on Colorado's ability to amortize core deposits obtained in an acquisition of several banks. (The value of core deposits derives from the spread between the rates paid on such deposits and the rate that would be paid on the "market alternative").

The 10th Circuit found Colorado had met its evidentiary burden by showing the core deposit intangible had an ascertainable value that was independent of goodwill and a limited useful life, the length of which could be ascertained with reasonable accuracy.

Moreover, Colorado's approach was reinforced by regulatory authority. …

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