SECTION 1. PURPOSE

This revenue procedure provides a safe harbor election for allocating success-based fees paid in business acquisitions or reorganizations described in § 1.263(a)–5(e)(3) of the Income Tax Regulations. In lieu of maintaining the documentation required by § 1.263(a)–5(f), this safe harbor permits electing taxpayers to treat 70 percent of the success-based fee as an amount that does not facilitate the transaction. The remaining portion of the fee must be capitalized as an amount that facilitates the transaction.