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therefore decide whether petitioner did all that was in its power
to place the rigs at issue into service.
All of the CDC and Eason rigs were subject to the Suits
agreement. Both John Rogers and Jerry Suits testified that
during the taxable years at issue, both CDC and Eason owned
fleets of drilling rigs that they held as part of their drilling
business.
Respondent points to a Texas sales and use tax audit of 12
of the rigs in question, in which Samson argued that the rigs
were not subject to Texas use tax because it purchased them for
resale. This, however, was merely one of several alternative
arguments asserted by petitioner in the use tax audit. In audit
questionnaires in the Texas use tax proceeding, CDC described its
business operations as “oil and gas drilling” in 1988 and “oil
and gas operations” in 1991. Additionally, petitioner and the
State of Texas have agreed to defer to this Court for resolution
of this issue. If we determine that CDC is allowed depreciation
deductions, then it will be liable for Texas use tax.
In Sears Oil Co. v. Commissioner, 359 F.2d 191 (2d Cir.
1966), affg. in part, revg. in part and remanding T.C. Memo.
1965-39, the taxpayer purchased a canal barge that it was unable
to use until the following year because the canal froze. The
court found that the taxpayer was entitled to depreciation in the
year of purchase because (1) the barge was gradually
deteriorating as it was “subject to the weather elements”, (2)
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