Bruce Selig and Elaine Selig - Page 10

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          useful life of property if the taxpayer is to determine the                 
          section 167 depreciation deduction under section 168.  Therefore,           
          we shall follow Liddle v. Commissioner, supra, and Simon v.                 
          Commissioner, supra, in interpreting section 168, as restated.              
          Accordingly, if petitioners can show that the exotic automobiles            
          were subject to exhaustion, wear and tear, or obsolescence, they            
          are entitled to the depreciation deductions that they claimed.              
               Petitioners do not seriously attempt to prove that the                 
          exotic automobiles were subject to wear and tear in the sense of            
          physical deterioration.  Indeed, they state that obsolescence is            
          the principal basis for their claim of depreciation deductions.             
          Respondent argues that petitioners have failed to prove that the            
          exotic automobiles are subject to obsolescence.                             
               From the beginning, it has been clear that a taxpayer could            
          recover the cost of business property over a period shorter than            
          the ordinary useful life of the property if the taxpayer could              
          show that the assets would become obsolete in the business prior            
          to the end of such ordinary useful life.  See, e.g., Columbia               
          Malting Co. v. Commissioner, 1 B.T.A. 999, 1001 (1925).  Section            
          1.167(a)-9, Income Tax Regs., addresses obsolescence.  In                   
          pertinent part, it states:                                                  
               The depreciation allowance includes an allowance for                   
               normal obsolescence which should be taken into account                 
               to the extent that the expected useful life of property                
               will be shortened by reason thereof.  Obsolescence may                 
               render an asset economically useless to the taxpayer                   
               regardless of its physical condition.  Obsolescence is                 
               attributable to many causes, including technological                   




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