To the contrary, see supra note 3. See Brief for Petitioner at 22 (briefs were simultaneous), which states: “The Respondent has cited Darlington–Hartsville Coca–Cola Bottling Co. v. United States, 393 F.2d 494 (4th Cir.1968) and Roadway Inns of America v. Commissioner, 63 T.C. 414, 1974 WL 2730 (1974) as support for Respondent's argument that the exit and entrance fees were paid as part of a plan to produce a positive business benefit for future years.” Discussion

Prior cases have considered the renewal feature of a franchise as an aspect of the franchise when determining whether the franchise has a reasonably ascertainable useful life. Finoli v. Commissioner, 86 T.C. 697, 738 (1986); Chronicle Publishing Co. v. Commissioner, 67 T.C. 964, 979–980 (1977); Rodeway Inns of America v. Commissioner, 63 T.C. 414, 422 (1974); Toledo TV Cable Co. v. Commissioner, 55 T.C. 1107 (1971), affd. 483 F.2d 1398 (9th Cir.1973) ; see also Rev.Rul. 66–140, 1966–1 C.B.–140, 1966–1 C.B. 45, for a statement of the Commissioner's views. These cases indicate that franchise renewal expectations are generally not considered separate intangible assets.

Prior cases have considered the renewal feature of a franchise as an aspect of the franchise when determining whether the franchise has a reasonably ascertainable useful life. Finoli v. Commissioner, 86 T.C. 697, 738 (1986); Chronicle Publishing Co. v. Commissioner, 67 T.C. 964, 979-980 (1977); Rodeway Inns of America v. Commissioner, 63 T.C. 414, 422 (1974); Toledo TV Cable Co. v. Commissioner, 55 T.C. 1107 (1971), affd. 483 F.2d 1398 (9th Cir. 1973); see also Rev. Rul. 66-140, 1966-1 C.B. 45, for a statement of the Commissioner's views. These cases indicate that franchise renewal expectations are generally not considered separate intangible assets.

Under its § 165 analysis, the IRS argues that the cost of terminating a contract which is capital in nature, in order to enter into another capital contract, is a capital expenditure of the accepted contract, and does not constitute an abandonment. The IRS cites three cases in support of its position: Darlington-Hartsville Coca-Cola Bottling Co. v. U.S., 273 F. Supp. 229 (D.S.C. 1967), aff'd, 393 F.2d 494, 496 (4th Cir. 1968), cert. denied, 393 U.S. 962, 89 S.Ct. 402, 21 L.Ed.2d 376 (1968); Peerless Weighing and Vending Machine Corp. v. U.S., 52 T.C. 850 (1969); and Rodeway Inns of Am. v. Comm'r., 63 T.C. 414, 419-20 (1974). In all three cases, which were cases under § 162, not § 165, the taxpayer caused the termination of an existing contract or lease and paid a price to the other party in order to secure the termination, which in each case allowed the taxpayer to enjoy a more beneficial arrangement.