- 38 -
see sec. 1.167(a)-11, Income Tax Regs. Accordingly, ACRS
incorporates by reference the Asset Depreciation Range (ADR)24
classifications. Sec. 168(g)(2); Walgreen Co. v. Commissioner,
68 F.3d 1006, 1008 (7th Cir. 1995), revg. and remanding on
another issue 103 T.C. 582 (1994). ACRS reduces the number of
property classes from around 125 under the ADR system to six
(five as originally enacted). Sec. 168(c)(2); Sprint Corp. v.
Commissioner, supra.
In several revenue procedures, respondent had prescribed
asset guideline classes, asset guideline periods (class lives)
and ranges, and annual asset guideline repair allowance
percentages for assets used in business, manufacturing, and other
activities. E.g., Rev. Proc. 87-56, 1987-2 C.B. 674; Rev. Proc.
24 Prior to ERTA, the principal method used to assign useful
lives for personal property was the ADR and class life system,
which was effective generally for assets placed in service after
1970 and before 1981. Walgreen Co. v. Commissioner, 103 T.C.
582, 586-588 (1994), revd. and remanded on another issue 68 F.3d
1006 (7th Cir. 1995); Simon v. Commissioner, 103 T.C. 247, 254-
255 (1994), affd. 68 F.3d 41 (2d Cir. 1995); Clinger v.
Commissioner, T.C. Memo. 1990-459; see also sec. 1.167(a)-(11),
Income Tax Regs. Pursuant to that system, assets were grouped
into approximately 125 different asset guideline classes and a
guideline life was assigned to each class. A range of years,
i.e., the ADR, was then provided for each class of personal
property. The taxpayer could use a useful life of up to 20
percent longer or 20 percent shorter than the guideline life
prescribed by respondent for particular classes of depreciable
property. For each asset account in the class, the taxpayer
selected either a class life or an ADR that was used as the
useful life for computing depreciation. Sprint Corp. v.
Commissioner, 108 T.C. 384 (1997); Walgreen Co. v. Commissioner,
supra; Simon v. Commissioner, supra; Clinger v. Commissioner,
supra.
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