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class 00.11 takes priority over class 57.0. Petitioner argues that
that conclusion is wrong. Petitioner argues that, in Norwest Corp.,
we failed adequately to analyze two cases: Walgreen Co. & Subs. v.
Commissioner, 68 F.3d 1006 (7th Cir. 1995), revg. and remanding 103
T.C. 582 (1994), on remand T.C. Memo. 1996-374, and JFM, Inc. &
Subs. v. Commissioner, T.C. Memo. 1994-239.
The primary issue in Walgreen Co. was whether certain leasehold
improvements, currently described in class 57.0, were excluded from
class 50.0 (class 50.0) of Rev. Proc. 72-10, 1972-1 C.B. 721, 730
(Rev. Proc. 72-10), by virtue of being described in class 65.0
(class 65.0) of Rev. Proc. 72-10. Class 65.0 is entitled “Building
Services” and includes, among other things, “the structural shells
of buildings and all integral parts thereof”. The Court of Appeals
for the Seventh Circuit (the Seventh Circuit) traced the provenance
of class 65.0 to an asset category, “Buildings”, in Rev. Proc. 62-
21, 1962-2 C.B. 418, 419 (Rev. Proc. 62-21). The Seventh Circuit
summarized the relevant aspects of Rev. Proc. 62-21 as follows:
In 1962 the Internal Revenue Service prescribed useful
lives both for types of asset and types of business. Rev.
Proc. 62-21, 1962-2 Cum. Bull. 418. One type of asset was
“Buildings,” defined as including “the structural shell of
the building and all integral parts thereof.” One type of
business was “Wholesale and Retail Trade.” An asset might
be a building used in wholesale and retail trade, and thus
fall into two useful-lives groups. To take care of such
overlaps, Rev. Proc. 62-21 provided that an asset that
fell within both an asset group and an activity group
would be classified in the asset group.
Walgreen Co. & Subs. v. Commissioner, supra at 1007. The Seventh
Circuit noted that, unlike Rev. Proc. 62-21, Rev. Proc. 72-10 did
not contain a priority rule. Walgreen Co. & Subs. v. Commissioner,
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