- 3 -
1006 (7th Cir. 1995), revg. and remanding 103 T.C. 582 (1994).
In its opinion, the Court of Appeals quoted Rev. Proc. 77-3,
1977-1 C.B. 535, as directing that "'all classes of Rev. Proc.
72-10 * * * are hereby represcribed to include items of section
1250 property that were included prior to January 1, 1974 * * *
except for * * * Building Services and * * * Land Improvements.'"
Id. at 1008. From this the Court of Appeals reasoned that
if any items of section 1250 property, and specifically
the leasehold improvements that Walgreen made in its
drugstores and restaurants between 1980 and 1984, had
been included in Wholesale and Retail Trade by Rev.
Proc. 72-10, they continued to be included in it after
the Treasury "represcribed" the classes of Rev. Proc.
72-10 (all but Building Services and Land Improvements)
in 1977.
The Asset Depreciation Range system was later
replaced by the Accelerated Cost Recovery System, and
it is the latter system that is applicable to the
leasehold improvements in this case. But it
incorporates by reference the earlier classifications,
with the result that if the leasehold improvements are
classified in Wholesale and Retail Trade (now Class
57.0, but identical to the old Class 50.0, Hauptli v.
Commissioner, 56 T.C.M. (CCH) 583, 586, 1988 WL 116965
(T.C. 1988), revd. on other grounds, 902 F.2d 1505
(10th Cir. 1990)), Walgreen can depreciate them over 10
years. Otherwise it must depreciate them over either
15 or 18 years, depending on the dates on which various
improvements were made. 26 U.S.C. sections
168(c)(2)(C)(ii), (D), (g)(2) (1984).
In summary, when in 1972 the Internal Revenue
Service (in Rev. Proc. 72-10) repromulgated the class
Wholesale and Retail Trade after "eligible property"
had been expanded to include section 1250 property, the
effect was to bring within the class all assets used in
wholesale or retail trade except those classifiable
under Building Services; and when five years later the
Service repromulgated the Wholesale and Retail Trade
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