Susan L. Abelein - Page 14

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                         immediately above) over the aggregate number                 
                         of cattle listed in the partnerships’ books                  
                         and records and subject to depreciation.                     
                              For example, in the year 1980, the books                
                              and records of Florin Farms # 1 indicate                
                              that the partnership claimed 149 head of                
                              cattle subject to depreciation.  The                    
                              aggregate number of cattle listed in the                
                              depreciation schedules of all the                       
                              investor partnerships was 4,659.  For                   
                              purposes of this case, then, Florin                     
                              Farms # 1 would be considered to have 56                
                              head of cattle subject to depreciation,                 
                              computed as follows:                                    
                                   149 x 1,736 = 56                                   
                                   4,659                                              
               •    Depreciation for all cattle placed in service in                  
                    1980 will be computed using the straight line                     
                    method and a 5 year useful life -- without regard                 
                    to the ADR system, or any other methods previously                
                    used.                                                             
               •    All cattle which were already in partnerships on                  
                    January 1, 1980, will be considered placed in                     
                    service in 1977.  Such cattle would, therefore, be                
                    eligible for depreciation for only 2 years -- 1980                
                    and 1981.  They would then be considered fully                    
                    depreciated.                                                      
               •    Depreciation for all cattle placed in service                     
                    after 1980 will be computed using the Accelerated                 
                    Cost Recovery System, considering the cattle 5-                   
                    year property.                                                    
               •    All purchases of cattle after 1981 are in the year                
                    the partnership is formed.                                        
               •    Investment tax credit will be allowed on the                      
                    number of cattle in service during the first year                 
                    of the partnership’s existence (as revised by the                 
                    formula discussed above), times $4,000 per head.                  
                    Cattle will be considered placed in service in the                
                    year the partnership is formed.                                   
               •    All cattle purchased are new section 38 property.                 





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