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Participations/Residuals

Transamerica Corp. vs. U.S. D.C. Cal 86-2 USTC Para 9792, 670 F.Supp 1454. (N.D. Cal. 1986) This decision was reversed in 93-2 USTC Para 50,388, 999 F.2d 1362. (9th Cir. 1993)

Company cannot compute total participations and residuals to be paid under the ultimate revenues estimates used for the income forecast formula, and include them in the depreciable basis of a film to amortize at that time. They must be deducted as the fixed and determinable liability arises as revenue is earned.

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Page Last Reviewed or Updated: 11-Apr-2014