- 8 -
exhibitions were substantially less than the depreciation
deductions petitioner claimed with respect to such automobiles.
The parties do not dispute either that (1) the exotic
automobiles are tangible property or (2) the exotic cars were
used in petitioner's trade or business. Also, they do not
dispute any aspect of applying section 168 to the exotic
automobiles if we conclude that section 168 is applicable to the
exotic automobiles. The dispute between the parties is whether a
depreciation deduction is allowable under section 167(a) for
automobiles held in a pristine condition and exhibited for a fee.
The long and the short of it is yes, providing the
automobiles are subject to obsolescence. We have found that the
exotic automobiles were state-of-the-art, high technology
vehicles with unique design features or equipment. We have no
doubt that, over time, the exotic automobiles would, because of
just those factors, become obsolete in petitioner's business.
The fact that petitioners have failed to show the useful lives of
the exotic automobiles is irrelevant. Cf. Liddle v.
Commissioner, 103 T.C. 285, 296-297 (1994), affd. 65 F.3d 329
(3d Cir. 1995); Simon v. Commissioner, 103 T.C. 247 (1994), affd.
__ F.3d __ (2d Cir. 1995)
In the Liddle and Simon cases, we interpreted section 168,
as added to the Code by section 201(a) of the Economic Recovery
Tax Act of 1981 (ERTA), Pub. L. 97-34, 95 Stat. 172, 204 (sec.
168 (1981)). The operative term in section 168 (1981) is
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011