Transamerica Corporation v. United States

This appeal involves the proper interpretation of the IRS’s formula for calculating the *1373depreciation of the cost of production of a motion picture film. The majority holds that a taxpayer can include participations and residuals that have yet to be incurred in the cost basis of a film when calculating the amount of depreciation that can be deducted in a given year. Because I disagree with this conclusion, I respectfully dissent.

It is well established that liabilities which can only be calculated on the basis of future events are contingent and cannot be included in a cost basis. See, e.g.,…