Opinion ID: 554937
Heading Depth: 2
Heading Rank: 3

Heading: Useful Life of Property

Text: 37 Initially, taxpayer objects to the tax court determining the useful life of the partnership's contractual right to share in the proceeds of the film for depreciation purposes. According to the taxpayer, the IRS did not dispute the taxpayer's characterization of the film as having a five-year useful life and therefore the tax court improperly reached this issue. After reviewing the record, we find no merit to taxpayer's contention. 38 Alternatively, taxpayer alleges that the tax court erred in assessing a useful life of eight years. Taxpayer argues that the tax court should have followed the general three to five year rule established in previous cases dealing with feature-length films. However, the determination of the useful life is a question of fact, dependent upon the facts adduced at trial. 39 We review the tax court's determination of an eight-year useful life under the clearly erroneous standard. See Durkin, 872 F.2d at 1278. Contrary to the taxpayer's contention, there exists substantial evidence in the record to support the tax court's conclusion. Expert testimony presented at trial indicated that in 1981, a movie could be expected to produce revenue for approximately twelve years. Based upon a timetable generally observed by the film industry in releasing a film, the evidence established that theatrical release of a movie generally lasts two years, followed by a release to cable television for the next two years. This is followed by three to fours years of network broadcasting, after which syndication broadcasts begin. Normally, syndication lasts five to seven years. Thus, the record clearly supports the tax court's assessment of a useful life longer than five years and we will not disturb that finding on appeal.