- 40 -
necessary rig crews. After considering the record as a whole, we
find that CDC continued substantially the same trade or business
after the change of ownership as that conducted prior to the
change of ownership.
C. Conclusion
Based on all the facts and circumstances, we find that
during the relevant periods CDC was engaged in the contract
drilling business. Thus, the limitations of sections 382 and 383
are not triggered.
2. Section 167
Respondent argues that petitioner improperly claimed
depreciation deductions for assets of CDC and Eason held as
inventory for resale.9 Petitioner contends that it devoted all
of the assets it depreciated to the contract drilling business.
Section 167(a) allows as a depreciation deduction a
reasonable allowance for the exhaustion, wear and tear of
property used in a trade or business, or property held for the
production of income. Section 1.167(a)-2, Income Tax Regs.,
9 The depreciation issue relates only to rigs and equipment
that CDC purchased after the change of ownership and to the Eason
rigs and equipment. The parties do not contest the bases of the
assets.
Page: Previous 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 NextLast modified: May 25, 2011