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57.0 (asset class 57.0) property eligible for a 5-year recovery
period.
On May 2, 2002, respondent sent petitioner separate notices
of deficiency. In the notices of deficiency, respondent
determined that the 1996 and 1997 expenditures were eligible for
a 15-year recovery period under MACRS Asset Guideline Class 57.1
(asset class 57.1).
On July 22, 2002, petitioner filed separate petitions with
this Court on behalf of all eligible members of the affiliated
group of which petitioner was a common parent. In its petitions,
petitioner alleged that respondent:
erroneously disallowed [the] depreciation deductions
* * * by erroneously classifying [the tanks] as “land
improvements” designated as asset class 57.1 * * *
rather than as “section 1245 assets used in marketing
petroleum and petroleum products” designated as asset
class 57.0 * * *
OPINION
Section 167(a)(1) permits a depreciation deduction for the
exhaustion and wear and tear of property used in a trade or
business. In the case of tangible property, the rules of section
168 will determine the proper depreciation deduction. See secs.
167(b), 168(a). Section 168(e) places property into categories
on the basis of the property’s class life, which categories are
then used to determine the applicable recovery period under
section 168(c).
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