Arvid E. Jackson - Page 4

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            United States, 423 F.2d 1118, 1120 (9th Cir. 1970); Gordon v.                                 
            Commissioner, 85 T.C. 309, 322-323 (1985); Early v. Commissioner,                             
            52 T.C. 560, 566 (1969) (noting that section 167(a)(2)1 provides                              
            the authority for such a deduction), revd. on another issue 445                               
            F.2d 166, 169 (5th Cir. 1971).  However, section 2732 disallows                               
            deductions for amortization of a life interest acquired by gift,                              
            bequest, or inheritance.                                                                      











            1    SEC. 167.  DEPRECIATION.                                                                 
                               (a) General Rule.--There shall be allowed as a                             
                  depreciation reduction a reasonable allowance for the                                   
                  exhaustion, wear and tear (including a reasonable allowance                             
                  for obsolescence)--                                                                     
                                                                                                         
            *    *    *    *    *    *    *                                                               
                                     (2) of property held for the production of                           
                               income.                                                                    
            2    SEC. 273.  HOLDERS OF LIFE OR TERMINABLE INTEREST.                                       
                              Amounts paid under the laws of a State, the                                
                        District of Columbia, a possession of the United                                  
                        States, or a foreign country as income to the holder of                           
                        a life or terminable interest acquired by gift,                                   
                        bequest, or inheritance shall not be reduced or                                   
                        diminished by any deduction for shrinkage (by whatever                            
                        name called) in the value of such interest due to the                             
                        lapse of time.                                                                    




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