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estimation, petitioner’s reclassification involved changing (1)
the recovery period over which depreciation deductions were to be
claimed from 31.5 or 39 years to 15 years and (2) the method by
which depreciation was to be calculated from straight line to
declining balance. Respondent further avers that these
alterations are not immaterial in that they implicate the timing
of deductions, are not equivalent to a change in useful life, are
not akin to the mere correction of a posting error, and do
diverge from a consistently established method.
It is also respondent’s position that the above change was
made without securing respondent’s consent. Respondent relies on
the fact that petitioner neither filed a Form 3115 nor followed
any other prescribed administrative procedures for effecting such
a change.
III. Application
The initial question raised by this matter is whether
petitioner’s treatment of the gas stations as 15-year property
constitutes a change in accounting method within the meaning of
section 446(e) and related regulations. If such inquiry is
answered in the affirmative, a second question regarding whether
petitioner obtained consent for the change will be presented.
As previously indicated, a change in accounting method for
purposes of section 446(e) is generally defined to encompass a
change in the overall plan of accounting for income or deductions
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Last modified: May 25, 2011