& | Commissioner 2f Internal Revenue, , im re: IT :E:SM-IG-A6002. “2= this payment represents not only a return on the capital , but also a part of the orinciple which the company is getting back, This is the same principle as a manufacturer who is allowed depreciation on his machinery. Ho sells his machines with his goods by charging a certain amoun t of the cost of his machines into each article of g00ds sold, so that finally he has sold all of hig machines, and has his capital returnea to him for reinvestment into new machines or anything else he may decide. These eontracts become legs valuable each year until they will finally have expired, and unles s a pro rata reserve be set up out of éxch year's receipts, the amount of the Browning capital will have hecome extinet, and, furthermore, will have been taxed by an income tax law. | The Law, Section chises may 214{a) (8) makes provision for the allowance of a deduction to provide for the wasting away of the Capitel of a business. Also, Article 163. Regulations 45, 1918, specifically states that patents and copyrights, lieenSes md fran ance, be subjects of a depreciation allow- these licenses are, therefore. specifically provided for an allowanee for. depreciation. That these are Licenses ig evident by the very languege used in them ana by their very nature, Definitions licenses. a8 Foe J ¥, of the best dictionaries Accountant s' Dictionary by #.C.A. defines "license": also Pittman, prove edited these by authority granted by one person to another, under which the latter is permitte d to do eertrain things which would otherwise be illegal." Webster’s Dictionary says: “An authority to exercise one Or privileges setured by a patent.” valuable of Furthermore, parts of the these patents licenses more of the represent the essentially themselres,. That these licenses were scquisition has been repeatedly very valueble at the date admitted by different members