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vering certain inventions made by its the patents and the salaries of the patented were paid by the corporation The corporation may not include in t representing either the cost of the value." (A. R. R. 71. 18-20-906.)

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"When a corporation has made expenditur patterns, or models representing work of an such designs, drawings, patterns or models pr result in the production of salable goods, th capital asset, and the entire cost thereof, in development expenses, will be capitalized."

"The Income Tax Unit notified the corporatio Patent Expense is a capital expenditure and the amount thereof returned to the corpora charges pro rated over the life of the patent."

Deducing from the several decisions, itpolicy adopted by these companies of charg pense a certain proportion of their experime patent expenses and assigning the remainde expense is justifiable and in accord with good

And the greatest problem of valuation-much later date the fair market value as at 1 ent or group of patents, copyrights, tradeworked out according to the peculiar facts ( The decisions in several cases are, however, ternal Revenue Bureau has attempted to lay for guidance, though stating they are not trolling, however, if better evidence is present

"No method of determining this value can be which will adequately meet all circumstances. a question of fact to be established by any sonably and adequately make it appear." (F 33 Rev.)

"In general, value as at March 1, 1913, of 1 mixed, may be established by consideration of like property occurring on or about March 1, facts pertaining to such value." (O. D. 7. 1

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he question of providing some pracas of March 1, 1913, or of any other s applying to intangible assets, but specific rule of guidance for deterich would be applicable in all cases re there is no established market to alue, even of tangible assets, is one and the same thing is even more good will, trade-marks, trade brands, ethods of reaching a conclusion as to Committee suggests may be utilized of valuation, not to be regarded as nce is presented in any specific case. obsolescence or loss of good will or primarily upon the taxpayer to show Crade-marks on March 1, 1913. Of have been acquired for cash or other to March 1, 1913, the measure of ount of cash or value of other condeduction will be allowed for the Duilt up by the taxpayer since March are made, therefore, merely as sugIness and validity of the taxpayers'

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ed that in numerous instances it has wholesaler liquor dealers to put out nds only so much goods as could be blished market price therefor, and to ical manufacture, age, and character brand at all, at figures very much brands commanded. In such cases which whisky was sold under a given Ler brand name, or under no brand, - sold during a given year gives an

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"The third method and possibly the one w have to be applied as a check in the absence application of the preceding ones is to allow over a period of years prior to March 1, 1913, five years, a return of 10 per cent upon the a the period. The surplus earnings will then be able for return upon the value of the intang opinion of the Committee that this return shou basis of not more than five years' purchasethe amount available as return from intangi of the intangibles.

"In view of the hazards of the business, the and the difficulties in preventing imitation or brands affecting the sales of the genuine goods opinion that the figure given of 20 per cent not unreasonable, and it recommends that no be attached in any case to intangibles without showing that the value of the intangibles V would be reached by applying this formula.

"The foregoing is intended to apply particula of existence by the prohibition law, but will far as the third formula is concerned, to othe less hazardous nature. In the case, however, of a business which consists of the manufac articles of every-day necessity not subject to where the hazard is not so great, the Commit the figure for determination of the return on reduced from 10 to 8 or 9 per cent, and tha talization of the return upon intangibles migh 15 per cent.

"In any or all of the cases the effort should earnings a purchaser of a business on March have expected to receive from it, and therefo should be used for averaging actual earnin in which there were extraordinary factors way. Also, in the case of the sale of good wi

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1900, or the date of the establishtrade brand, if subsequent to that

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on sales, i. e., the difference between e cost price of the merchandise sold.

ses and losses of the business which, e gross profit on sales, will produce

Capital Invested in the business as at year.

luded in the Invested Capital at the - in respect of good will, trade-marks the date and amount of each subseDod will, trade-marks or trade brands.

offer to purchase any of the tradeting forth in particular the date of whose behalf made; the amount of Fable in cash or stock; and the date hase price was proposed to be paid, on each such date."

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