In 1970, Allan “Bud” Selig (plaintiff) purchased a Seattle baseball franchise in order to move it to Milwaukee. The last baseball franchise in Milwaukee had moved to Atlanta four years earlier due to low profits. The Seattle franchise cost $10.8 million, with $100,000 allocated to equipment and supplies, $500,000 allocated to the value of the franchise, and $10.2 million allocated to the value of the 149 player contracts. Selig had the player contracts appraised four times, yielding an average of just over $10 million. The United States government (government) (defendant) had the player contracts appraised twice, finding values of $3.2 million and $5.1 million. Selig’s appraisals took into account the market for selling an entire franchise, whereas the government’s appraisals looked at the player values individually. Selig amortized the $10.2 million over the course of the players’ five-year useful lives for federal tax purposes. The Internal Revenue Service (IRS) audited Selig and disallowed the deduction for player contracts. Selig paid the deficient tax and sought a refund from the IRS. The IRS denied the refund, and Selig brought suit against the government in federal district court. The district court held that Selig’s amortized deduction was proper, and the government appealed.