San Diego Law Review

Ownership Not Required: The Expansion of Section 167(h) in CGG Americas, Inc. v. Commissioner

Author(s)

Thompson

Editor(s)

Faculty editor: Larry Alexander

Details

Publication Law Review
Volume 54
Issue 1
Start Page 177
Month March
Year 2017
Type Comment
Subject Area

Abstract

CGG Americas marks a significant departure from past treatment of G&G expenses, establishing a precedent for the expanded application of Section 167(h) to a novel body of taxpayers. This Note analyzes the court’sdecision to expand Section 167(h) to such entities as CGGA, drawing uponcases, revenue rulings, and legislative history to discern the appropriatenessof the decision in light of relevant policy concerns. Following this Introduction, Section II of this Note sketches the historical framework of G&G expenses, using historical cases and revenue rulings to illustrate the evolution of the concept across much of the twentieth century and detailing the legislative history of the concept’s ultimate codification in Section 167(h) in 2005. Section III thereafter recounts the facts and analysis of the CGG Americasopinion, noting strengths and weaknesses in the parties’ arguments amongst the backdrop of previously discussed historical points of reference. SectionIII also discusses the implications of the court’s approach in terms of its potential future application. Section IV concludes that while the approaches advanced by each party hold merit, the textualist approach to statutory interpretation advanced by CGGA deviates from, or rather expands upon, the historical conceptualization of G&G expenses. Furthermore, this Note advocates an approach limiting the application of Section 167(h)(1) in the context of seismic data acquisition and processing, under which an entity benefitting from economies of scale associated with the nonexclusive licensing of data would be barred from applying Section 167(h) to expenses from those activities giving rise to the seismic data.

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