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Furthermore, we disagree with petitioners' contention that
no change can be made to the annual amortization allowance absent
a change to the estimated useful life or salvage value of the
property. Under the straight line method of computing
amortization, the amortization allowance is calculated annually
based on three independent factors (i.e., the adjusted basis of
the property at the beginning of the taxable year, the salvage
value of the property, and the remaining useful life of the
property at such time). Sec. 1.167(b)-1(a), Income Tax Regs.
"The reasonableness of any claim for depreciation * * *
[amortization in the case of intangible assets] is to be
determined upon the basis of conditions known to exist at the end
of the period for which the return is made." Sec. 1.167(b)-0(a),
Income Tax Regs. The annual straight line depreciation
allowance, therefore, is a fluid calculation from year to year
using estimates. Accordingly, where there is an adjustment to
any one of the three factors used in the straight line method,
whether it be the adjusted basis, estimated useful life, or
salvage value, the annual straight line amortization allowance
must change as well. Consequently, we reject petitioners'
contention that Kilgroe v. United States, supra, is
distinguishable because it did not consider the preeminence of
the annual accounting concept in calculating depreciation
deductions for open years where there has been no change in the
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