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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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