Northern Natural Gas Company v. United States of America, Northern Propane Gas Company v. United States

STEPHENSON, Circuit Judge.

This appeal presents the perplexing question of whether, for depreciation purposes, the “enhanced value” of a going concern’s assets may be included in the adjusted basis of a purchaser of the business. 1

From 1960 to 1964, appellant (Northern) acquired the assets of 58 propane gas distributorships located within an eight state area. Northern was subsequently determined by the Commissioner of Internal Revenue to have allocated excessive dollar amounts of the lump sum purchase price for each distributorship to the depreciable assets, i. e., no part of the contract…