98 T.C. 435 (1992)
JEFFERSON-PILOT CORPORATION AND SUBSIDIARIES, Petitioner
COMMISSIONER OF INTERNAL REVENUE, Respondent
United States Tax Court
April 13, 1992
P's subsidiary purchased three radio stations for $15 million in 1974. P seeks to deduct a portion of the purchase price which it claims is attributable to the FCC broadcast licenses which were transferred pursuant to the sale. HELD: An FCC broadcast license constitutes a " franchise" and the FCC retained a " significant power, right, or continuing interest with respect to the subject matter of the franchise" as those terms are used in sec. 1253, I.R.C. A ratable portion of the purchase price attributable to the licenses is therefore deductible under sec. 1253(d)(2), I.R.C.
Dean F. Chatlain and Peter H. Winslow, for petitioner.
Albert L. Sandlin, Jr. and Clinton M. Fried, for respondent.
Respondent determined deficiencies in petitioner's Federal income tax as follows:
Pursuant to the agreement of the parties, all issues contained in the statutory notice of deficiency related to the 1969, 1970, 1971, and 1972 tax years have been settled. With respect to the 1974 tax year, petitioner concedes the worthless stock deduction related to Jefferson-Pilot Fire and Casualty Co.'s $100,000 investment and Jefferson-Pilot Title Insurance Co.'s $51,000 investment in Franklin National Bank preferred stock, as set forth in the statutory notice of deficiency. Petitioner also concedes an adjustment relating to $141,966 of amortization relating to customer lists. The only remaining issue with respect to 1974 is whether petitioner is entitled to deduct a ratable portion of the cost of purchasing FCC broadcast licenses for stations WQXI-AM, WQXI-FM, and KIMN-AM under section 1253. 
BACKGROUND Some of the facts have been stipulated and are so found. The stipulation of facts and attached exhibits are incorporated herein by this reference. Petitioner is a North Carolina corporation with its principal place of business in Greensboro, North Carolina. Petitioner is publicly owned, and its stock is listed on the New York Stock Exchange. Petitioner is a holding company whose subsidiaries provide a variety of insurance, financial, and communications products and services. Petitioner's broadcasting subsidiary, Jefferson-Pilot Communications Co. (J-P Communications) operates an NBC television network affiliate in Richmond, Virginia, a CBS television network affiliate in Charlotte, North Carolina, and radio stations in Atlanta, Georgia, Charlotte, North Carolina, Denver, Colorado, Miami, Florida, and San Diego, California. J-P Communications also produces and syndicates television sports programming including Atlantic Coast Conference football and basketball, Southeastern Conference basketball, and NASCAR racing events. J-P Communications also supplies computer services to other broadcasting stations, advertising agencies, and station representative firms. Page 437
As of the start of 1974, J-P Communications had operated television station WBTV (Charlotte) since 1949, television station WWBT (Richmond) since 1968, radio station WBT-AM (Charlotte) since 1945, and radio station WBT-FM (Charlotte) since 1947. Petitioner and its nonlife insurance subsidiaries (including J-P Communications) filed a consolidated Federal income tax return for 1974. By 1973, J-P Communications had developed an acquisition strategy under which it sought to purchase radio stations in major metropolitan markets in the southern United States. Pursuant to this strategy, on August 30, 1973, J-P Communications entered into an agreement with Pacific and Southern Co., Inc., to purchase various assets related to radio station WQXI-AM in Atlanta, Georgia, radio station WQXI-FM in Smyrna, Georgia (an Atlanta suburb), and radio station KIMN-AM in Denver, Colorado (hereinafter referred to as the acquired radio stations). 
In exchange for the acquired radio stations, J-P Communications agreed to pay Pacific and Southern Co. $15 million. In the agreement, Pacific and Southern Co. warranted that it possessed all licenses necessary to operate the acquired radio stations. The agreement specifically identified these licenses as assets which were to be transferred pursuant to the agreement. The agreement required Pacific and Southern to file for license renewals with the Federal Communications Commission (FCC) if the transaction was not closed by the date that the renewals were due, and the agreement also required that the Commissioner of the FCC consent to the transfer of the licenses as a condition precedent to the closing of the agreement. On September 7, 1973, J-P Communications and Pacific and Southern Co. filed an application with the FCC to assign the broadcast licenses of the acquired radio stations to J-P Communications. In order to lawfully operate a radio station, the operator must be licensed by the FCC. 47 U.S.C. sec. 301
(1988). Only the FCC may issue radio broadcasting licenses, and FCC approval is required in order to transfer a broadcast license. 47 U.S.C. secs. 303(l)(1), 310 (1988). In connection with the Page 438
application for the assignment of the FCC licenses from Pacific and Southern Co. to J-P Communications, J-P Communications retained Media Statistics, Inc., to conduct various surveys of the general public. Media Statistics, Inc., conducted surveys in the Atlanta and Smyrna, Georgia areas, as well as Denver, and surrounding areas of Colorado. By letter dated January 9, 1974, the FCC granted the application for assignment of the acquired radio stations' licenses to J-P Communications, subject to certain conditions. The FCC imposed a $300,000 transfer fee on the assignment of the FCC licenses. Pursuant to the purchase agreement, J-P Communications and Pacific and Southern Co. each paid one-half of the transfer fee. J-P Communications completed the purchase of the assets of WQXI-AM, WQXI-FM, and KIMN-AM on February 28, 1974. On December 31, 1974, Manufacturers' Appraisal Co., of Philadelphia, Pennsylvania, issued to J-P Communications a 312-page report on the fair market value of the real estate and personal property of the acquired radio stations as of March 1, 1974. On February 26, 1975, Manufacturers' Appraisal Co. issued to J-P Communications its appraisal report on the intangible assets of the acquired radio stations and incorporated the values of the real estate and personal property detailed in the 312-page report. In accordance with the February 26, 1975, appraisal from Manufacturers' Appraisal Co., petitioner allocated the $15 million purchase price of the acquired radio stations for financial and tax accounting purposes as follows:
| Real estate
Personal property 
| Customer lists/records
Goodwill and all other intangibles 
In connection with this litigation, petitioner retained Broadcast Investment Analysis, Inc. (BIA), to prepare a valuation of the intangible assets purchased by J-P Communications Page 439
in connection with the transfer of WQXI-AM, WQXI-FM, and KIMN-AM. This valuation allocates the $15 million purchase price, as reduced by the portion of the price allocated to the tangible assets, among various intangible assets. BIA appraised the WQXI-AM, WQXI-FM, and KIMN-AM FCC licenses at $2,090,000, $1,440,000, and $1,892,000, respectively. Based on these reports, petitioner now contends that the $15 million purchase price should be allocated among the various assets purchased as follows:
| Real estate
| Personal property
| FCC licenses
| Goodwill, trade names, and
| all other intangibles
DISCUSSION The only remaining issue is whether a ratable portion of the cost of the FCC licenses for WQXI-AM, WQXI-FM, and KIMN-AM is deductible under section 1253(d)(2)(A). 
Section 1253(d)(2)(A) provides that if a transfer of a franchise, trademark, or trade name is not treated as a sale or exchange of a capital asset under section 1253(a), then any single payment in discharge of a principal sum agreed upon in the transfer agreement shall be deductible ratably by the payor over a period of 10 years or the period of the transfer agreement, whichever is shorter. 
In order for petitioner to deduct a ratable portion of its payment for the FCC licenses under section 1253(d)(2)(A), we must determine whether an FCC license is a " franchise", as Page 440
that word is used in section 1253, and whether the sale of the licenses should not be treated as a sale of a capital asset under section 1253(a). Under section 1253(a), a transfer of a franchise shall not be treated as a sale or exchange of a capital asset if the transferor retains any significant power, right, or continuing interest with respect to the subject matter of the franchise. Section 1253(a) refers to the retention of powers, rights, or continuing interest by the " transferor" . It could therefore be argued that section 1253(a) refers only to the " transferor" from whom the taxpayer purchased the franchise. If such a transferor was itself a mere franchisee who retained no significant power, right, or continuing interest in the subject matter of...