Hastie, Chief Judge, and Kalodner and Aldisert, Circuit Judges.
These appeals from decisions of the Tax Court present the question whether appellant met its burden of establishing that certain acquired intangible assets qualified for amortization for a limited period of time and that the length of this period was estimable with reasonable accuracy. The Tax Court held that appellant*fn1 failed to meet its burden. We affirm.
By written contract of sale S.S. Ballin Agency, Inc., purchased, for $156,000, a business known as United Health Agency, a single proprietorship owned by Joseph Delman. The agency represented American Casualty Company in the sale and servicing of health and accident insurance policies.*fn2 Transferred to appellant was the agency's agreement with its insuring company; all contracts with agents and brokers; the right to expirations under the United Health Agency-American Casualty Company agreement; lists and records of customers or policy holders indicating policy expiration dates; all books, records, and documents of the agency; and the exclusive right to the use of the name, United Health Agency.
Treating the purchase price as a cost of "earned commissions on renewal premiums," appellant claimed a deduction for amortization under 26 U.S.C. § 167, contending that the assets had a limited useful life and thus qualified as an "intangible asset * * * to be of use in the business for only a limited period, the length of which can be estimated with reasonable accuracy." Treas. Regs. 1.167(a)-3. The Commissioner disallowed the deduction and the Tax Court agreed.
Although appellant persists in its contention that "only the mere right to commissions" was acquired, it argues that the label affixed to the transferred assets is immaterial. Thus, whether that which was purchased be regarded as "rights to commission" or "lists of expirations" is not important; what appellant deems critical is the proposition that because the assets had a limited useful life in the conduct of its business, appellant is entitled to the appropriate deduction for depreciation. Appellant emphasizes that it conducts its business by relying on leads obtained by advertising for a large volume of small individual policies, rather than concentrating on sales campaigns for new business from the acquired expiration lists. It urges that we distinguish the facts here from those in Marsh & McLennan, Inc. v. Commissioner of Internal Revenue, 420 F.2d 667 (3rd Cir. 1969), on the ground that the purpose of the acquisition in Marsh & McLennan was not restricted to income generated from lists acquired, but was to obtain as well substantial additional business from five or six large commercial accounts.
The Commissioner responds that the acquired assets do not qualify for amortization as a matter of law because the lists of insurance expirations, being part of a going insurance agency business, were either part of the goodwill or "so inextricably linked with goodwill as to have an indefinite useful life and therefore not depreciable." Morris v. Commissioner, 1968 T.C. Memo 295, 27 T.C.M. 1558, 1562 (1968), quoted in Marsh & McLennan, supra, 420 F.2d at 670.*fn3 Additionally, the Commissioner contends that even if the assets had the capacity to qualify, the taxpayer failed to meet its burden of establishing the useful life of the intangible assets. Thrifticheck Service Corp. v. Commissioner of Internal Revenue, 33 T.C. 1038 (1960), aff'd 287 F.2d 1 (2nd Cir. 1961).
We do not find it necessary to review our holding in Marsh & McLennan, for we are persuaded that the Tax Court did not err in finding "that Ballin's unsupported and generalized allegations fall far short of the proof required to establish the useful life of the intangible assets in issue."
To establish the limited useful life, appellant relied only on the evidence of the other taxpayer involved in the proceeding below, Delman, whose "best recollection" was that the average life of an accident and health policy was 6 1/2 to 7 years.*fn4 The Commissioner presented an expert witness, to whose testimony the Tax Court "attach[ed] great weight." This witness had a professional insurance background, previously testified in various court proceedings, and was accepted by appellant, without objection, as "very qualified." He testified that at the time an accident health policy is written there is no way of estimating the life, that he knew of no way to determine with reasonable certainty "the retention of clients," and that "there are too many human elements involved that change perhaps one set of statistics versus another."
After weighing the conflicting testimony, the Tax Court found that appellant did not meet its burden of establishing that the insurance expirations had a limited useful life, determinable with reasonable accuracy. Marsh & McLennan, Inc. v. Commissioner of Internal Revenue, supra. We find no error in this finding. See Commissioner of Internal Revenue v. Duberstein, 363 U.S. 278, 80 S. Ct. 1190, 4 L. Ed. 2d 1218 (1960); Farcasanu v. Commissioner of Internal Revenue, 436 F.2d 146, 148, 140 U.S. App. D.C. 398 (D.C. Cir. 1970); Mack v. Commissioner of Internal Revenue, 429 F.2d 182, 184 (6th Cir. 1970); Clodfelter v. Commissioner of Internal Revenue, 426 F.2d 1391, 1392 (9th Cir. 1970).
The decisions of the Tax Court in all three appeals ...