Securities-Intermountain, Inc. v. United States

The United States appeals from the decision of the district court which allowed recovery to Securities-Inter-mountain (Securities), the plaintiff below, for federal income taxes paid for the years 1964, 1965, and 1966. The appeal raises the issue of whether a mortgage portfolio purchased by Securities is an asset which can be fully depreciated under § 167(a), Int.Rev.Code of 1954. We affirm, based on the finding of the district court that no part of the price paid constituted payment for property, tangible or intangible, other than the mortgage portfolio.

The basic facts are set out in the opinion of the court below:

The trial court held that the entire purchase price was depreciable. The Government challenges this decision, arguing that a portion of the purchase price represents the right to do future business with Aetna. Since such portion would be an asset of indeterminable life, it could not be depreciated.

The Government’s argument hinges on its interpretation of the transaction. By its view, the right to service mortgages and receive compensation assured the right to represent the investor, Aetna, in the future. Government witnesses testified that it is the practice in…