Required:Prepare a tax research memorandum in proper form based on the facts and issues provided (Using a memo header, copy and paste the “Facts” and “Issues” into a document – you must supply the “Conclusion” and “Analysis”). All relevant facts are presented and you are not expected to edit the facts. Also, you cannot ask the client to clarify the facts. If you find that facts are vague, you must figure out a way to deal with this in the memo.
I don’t think anyone should be surprised to learn that, to do a thorough job here, you’re going to be looking for Code, Regs and other authority (such as cases and Rulings). Be on notice that finding case law is necessary to preparing a complete memorandum in this assignment. That being said, the issues here are fairly narrow. Although I don’t believe in assigning page limits, if you’re getting beyond 5 pages here, you should think about editing. Don’t interpret this to mean I believe a 5 page paper is necessary, I believe this memo may be thoroughly completed in less than 5 pages.
Research and writing both count and proper citation format (part of the writing grade) is a must.
There will be no draft submitted or workshop for this paper and I will offer only minimal (if any) help. You have all the tools you need to succeed and you have lots of time with no other obligations in this class. Do not work with classmates on this assignment. Do not ask me to “take a look” before you submit – the answer is no. Part of this assignment is to see what it is you can do on your own.
Facts:Good Neighbor, Inc. is a publicly traded U.S. corporation. Good Neighbor has a calendar year-end for financial and tax reporting purposes. Good Neighbor is a regional newspaper publisher serving South Florida. It publishes many local newspapers throughout the region.
On 4/28/2006, Good Neighbor acquired substantially all the assets (real, tangible and intangible) of Tequesta News, Inc., in a fully taxable asset acquisition. Tequesta News was a weekly local paper reporting for the neighborhoods of Tequesta, FL (a small village in S. Florida). Good Neighbor owns many such small papers. After acquiring Tequesta’s assets, Good Neighbor continued to publish the Tequesta News.
In allocating the purchase price of the acquired assets under the residual method required by Code section 1060, Good Neighbor recorded goodwill for tax purposes. The goodwill that was recorded was classified as an “amortizable section 197” intangible and was being amortized over its useful life (15 years).
After the recession hit, Tequesta News’s subscriptions and ad revenue plummeted. Eventually, Good Neighbor ceased publishing Tequesta News. The last Tequesta News was published in June 2014. Since that time, no efforts have been made to seek subscriptions or advertisers for the Tequesta News. In June 2014,the Tequesta News assets that were acquired in 2006were deployed in Good Neighbor’s other publications.
Issue:May Good Neighbor deduct the entire amount of its unamortized tax basis in the Tequesta News goodwill in 2014?
NOTE (do not put this in the memo): The facts clearly state that the intangibles at issue were acquired in a 1060 transaction and are amortizable section 197 intangibles. As such, your papers should not contain detailed discussions of Code section 1060 or of the rules determining whether the intangibles are amortizable under Code section 197. There may be other aspects of Code section 197 to discuss, but the categorization of the intangibles as amortizable section 197 intangibles is not in question.
Also, although Good Neighbor is a corporation, the issues here are not specific to corporations (if you’re heading into Subchapter C, you are getting off track).