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the basis in the amortizable asset which, in turn, reduces the
amount available for amortization in subsequent years. See,
e.g., Kilgroe v. United States, 664 F.2d 1168, 1170 (10th Cir.
1981).
Respondent, citing Kilgroe v. United States, supra, contends
that the correct amortization deduction allowable to SPC-SC and
SPC-FL for taxable years after 1990 should be calculated by
apportioning the corrected amortizable bases of the properties,
as reduced by amortization allowed prior to taxable year 1991,
over the properties' remaining useful life.
Petitioners, however, assert that the correct annual
amortization allowable to SPC-SC and SPC-FL should be calculated
by apportioning the corrected amortizable bases of the properties
without regard to amortization allowed prior to 1991, over the
agreed useful life (i.e., 15 years for termite contracts and 10
years for pest control contracts), until the remaining
amortizable bases are exhausted. Citing Fribourg Navigation Co.
v. Commissioner, 383 U.S. 272 (1966), and section 1.167(a)-1(b)
and (c), Income Tax Regs., petitioners maintain that the original
annual straight line amortization allowance may be changed
prospectively only when there has been a change in either the
estimated useful life or the salvage value of the property in
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