Max Baucus: “In 1993, the United States Court of Appeals for the Ninth Circuit held in Transamerica Corporation v U.S. that, for…”

“In 1993, the United States Court of Appeals for the Ninth Circuit held in Transamerica Corporation v U.S. that, for purposes of the income forecast depreciation method, the anticipated cost of participations and residuals should be included in a property's cost basis at the beginning of the property's depreciable life. As the Ninth Circuit determined in Transamerica, inclusion of participations and residuals in a property's initial cost basis is necessary to properly match the income and expenses associated with the property and to clearly reflect income. Yet, it is my understanding that the IRS is not currently permitting such treatment. To eliminate the current uncertainty, Senator Grassley and I have encouraged Treasury to consider regulations clarifying that participations and residuals may be included in a property's initial cost basis for purposes of the income forecast method of depreciation.”