Duke Energy Natural Gas Corporation - Page 2

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               Thomas P. Marinis, Jr., Sarah A. Duckers, and Charles T.               
          Fenn, for petitioner.                                                       

               Emron M. Pratt, Jr. and Todd A. Ludeke, for respondent.                
                                       OPINION                                        

               LARO, Judge:  The parties submitted this case to the Court             
          without trial.  See Rule 122.  Petitioner petitioned the Court to           
          redetermine respondent's determination of income tax deficiencies           
          of $399,369 and $753,089 for its taxable years ended                        
          September 30, 1991, and September 30, 1992, respectively.                   
               We must decide the cost recovery period of certain natural             
          gas recovery systems under the modified accelerated cost recovery           
          system (MACRS).  Petitioner argues for a 7-year recovery period.            
          Respondent argues for a 15-year recovery period.  We hold for               
          respondent.  Unless otherwise noted, section references are to              
          the Internal Revenue Code in effect for the years in issue.  Rule           
          references are to the Tax Court Rules of Practice and Procedure.            
          References to "asset class" are to the asset classes set forth in           
          Rev. Proc. 87-56, 1987-2 C.B. 674.                                          
                                     Background                                       
               All facts are stipulated.  The stipulated facts and exhibits           
          submitted therewith are incorporated herein by this reference.              
          Petitioner is the common parent of an affiliated group of                   
          corporations which file consolidated Federal income tax returns.            





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