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improvements and reasonably foreseeable economic
changes. Among these causes are normal progress of the
arts and sciences, supersession or inadequacy brought
about by developments in the industry, products,
methods, markets, sources of supply, and other like
changes, and legislative or regulatory action. * * *
In Columbia Malting Co. v. Commissioner, supra at 1001, we
said:
In order that the taxpayer may be entitled to the
obsolescence deduction in the years involved, there
must have been substantial reasons for believing that
the assets would become obsolete prior to the end of
their ordinary useful life, and second, it must have
been known, or believed to have been known, to a
reasonable degree of certainty, under all the facts and
circumstances, when that event would likely occur.
* * *
Under section 168(a), we need not concern ourselves with the
second part of that test (when obsolescence would occur), since
we need not determine the actual useful life of the property. As
to the first part of the test, we assume that the "ordinary"
useful life of the exotic automobiles in petitioner's trade or
business (as show cars) was indeterminable. Petitioners have
introduced no evidence from which we could find that the exotic
automobiles were subject to wear and tear or exhaustion.
Nevertheless, we are convinced that the exotic automobiles had a
limited useful life as show cars.
The exotic automobiles are state-of-the-art, high technology
vehicles with unique design features or equipment. Petitioner
testified that show cars such as the exotic automobiles:
are state of the art and within three years or four
years, five years, there could be new cars that are
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