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estimated useful life or salvage value, but there have been
excessive depreciation deductions allowed for taxable years now
closed.
Additionally, the regulation cited by petitioners, section
1.167(a)-1(b) and (c), Income Tax Regs., is inapposite to our
decision because neither the estimated useful life nor the
salvage value of the contract rights is in issue. Furthermore,
neither regulation contemplates the effect on the annual
amortization allowance where there has been an adjustment to the
original amortizable basis.
Petitioners' reliance on Fribourg Navigation Co. v.
Commissioner, 383 U.S. 272 (1966), is misplaced. The Court in
Fribourg considered whether the taxpayer was entitled to a
depreciation deduction in the year of an unanticipated sale of an
asset, prior to the end of its useful life, at a price exceeding
its adjusted basis. In Fribourg, unforeseen circumstances
created an acute shortage of cargo ships, and the taxpayer was
able to sell his ship at a substantial gain. The Commissioner
disallowed the depreciation deduction for the year of the sale,
on the ground that the tremendous appreciation in value of the
ship was inconsistent with any allowance for depreciation. In
holding that the depreciation was allowable, the Supreme Court
noted that depreciation of assets and the gain on the sale of
assets are distinct concepts, and that such an unanticipated
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