Participations/Residuals
Transamerica Corp. vs. U.S. D.C. Cal 86-2 USTC Para 9792, 670 F.Supp 1454. (N.D. Cal. 1986) This decision was reversed in 93-2 USTC Para 50,388, 999 F.2d 1362. (9th Cir. 1993)
Company cannot compute total participations and residuals to be paid under the ultimate revenues estimates used for the income forecast formula, and include them in the depreciable basis of a film to amortize at that time. They must be deducted as the fixed and determinable liability arises as revenue is earned.
References/Related Topics
Note: This page contains one or more references to the Internal Revenue Code (IRC), Treasury Regulations, court cases, or other official tax guidance. References to these legal authorities are included for the convenience of those who would like to read the technical reference material. To access the applicable IRC sections, Treasury Regulations, or other official tax guidance, visit the Tax Code, Regulations, and Official Guidance page. To access any Tax Court case opinions issued after September 24, 1995, visit the Opinions Search page of the United States Tax Court.
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