Federal Income Tax—Amoritization and the Expansion Sports Franchise—First Northwest Industries of America, Inc. v. Commissioner, 70 T.C. 817 (1978)

This note will first discuss past taxation practices of professional sports franchises. It will explain the "mass asset theory" as it has been applied to intangible assets outside the sports context and then examine the conflicting positions of the IRS and the Sonics as to the theory's applicability to the expansion franchise. Next, it will discuss the Tax Court's reasons for deciding not to apply the theory in First Northwest and suggest that the Ninth Circuit should similarly conclude that the theory is inappropriate in the context of expansion franchises. Finally, the note will explain the primary problem that results from a refusal to apply the "mass asset theory"-how to assess the value of the right to obtain the contracts of veteran players.