Associated Patentees, Inc. v. Commissioner
United States Tax Court
Four individuals transferred to petitioner certain patents which they jointly owned in equal proportions under a contract obligating petitioner to pay them 80 percent of its income from licenses granted for their use. Under this contract petitioner paid them $ 42,209.76 in the taxable year and in its return deducted that amount as royalties paid. Held: (1) This payment was a capital expenditure in acquisition of the patents.
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Four individuals transferred to petitioner certain patents which they jointly owned in equal proportions under a contract obligating petitioner to pay them 80 percent of its income from licenses granted for their use. Under this contract petitioner paid them $ 42,209.76 in the taxable year and in its return deducted that amount as royalties paid. Held: (1) This payment was a capital expenditure in acquisition of the patents. (2) Petitioner is entitled to recover by depreciation its total cost of the patents over their lives and, since such cost is not determinable until the close of the term…
1Opinion of the Court
OPINION.
Leech, Judge-.
Petitioner asks us to find from the evidence introduced upon the rehearing that the patents in question had a cost to it of $3,000,000. This we can not do. That evidence was directed to the question of value, whereas the question we have is one of cost. Moreover, that evidence consists, of an opinion based upon such uncertain factors that we do not think it carries weight in determining the value of the patents. We are convinced, however, from the testimony that the patents had great value, largely in excess of the total amounts paid by petitioner in the year 1940, and…
2Cases cited1 opinion
- John A. Nelson Co. v. HelveringSupreme Court of the United States · 1935
3Cited by9 opinions
- Green v. Comm'rUnited States Tax Court · 1984
- Simmonds Precision Prods. v. Comm'rUnited States Tax Court · 1980
- Omholt v. CommissionerUnited States Tax Court · 1973
- Watkins v. United StatesDistrict Court, D. Connecticut · 1957
- Associated Patentees, Inc. v. CommissionerUnited States Tax Court · 1945
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