Date of Award

Spring 2017

Degree Name

Bachelor of Science (BS)

Advisor(s)

Matthew Brodie

Abstract

In this paper, I will discuss the tax landscape surrounding the issues of intangible asset allocation during the sale of a franchise, the intangible assets that can be amortized, and the length of the amortization for those assets. There have been a few main changes to this landscape from 1970 to 2004. The first change resulted from the Selig case surrounding the sale of the Milwaukee Brewers in 1970. The next major change was the Tax Reform Act of 1976, followed by section 197 issued in 1993. The last change was the American Jobs Creation Act of 2004. Since 2004, there have been no changes enacted for sports franchises, even though the debate about whether or not sports franchises receive to many large tax breaks is still ongoing. The main issue I will analyze in this paper is the amortization rules for player contracts and local media and broadcasting rights. I am specifically focusing on their useful lives and whether or not they are deductible respectively. I will use the results of several court cases, such as Larid vs US, First Northwest Industries vs. Commissioner, and McCarthy, ET AL. v. U.S, to support my arguments and conclusions. With the help of these results, I intend to conclude that there needs to be a change to the useful life ruling for player contracts as well as the deductibility rules for the local media and broadcasting rights. My results could allow for a change to the length of deductibility for certain intangibles as well as a change to the number of intangibles available for deduction. In addition, my research could be used in future papers to conclude on new ways to determine useful lives and evaluate intangibles. It could also affect the valuation of certain intangibles.

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