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Commissioner, supra; Clark Oil & Refining Corp. v. United States,
supra; Fall River Gas Appliance Co. v. Commissioner, supra;
United States v. Akin, supra; Hotel Kingkade v. Commissioner,
supra. Thus, widespread support for a rule which would permit
near-automatic deduction for costs related to benefits lasting
less than one 12-month period is lacking.
A second, more fundamental problem with petitioner’s
argument is that even if such a 1-year rule were widely
recognized, it would be inapplicable to an accrual method
taxpayer. Case law requires that a distinction be drawn between
accrual and cash basis taxpayers in situations analogous to that
of petitioner. For instance, even in Zaninovich v. Commissioner,
616 F.2d 429, 431-432 & nn.5-6 (9th Cir. 1980), revg. 69 T.C. 605
(1978), upon which petitioner relies as creating a rule
“[allowing] a full deduction in the year of payment where an
expenditure creates an asset having a useful life beyond the
taxable year of twelve months or less,” the Court of Appeals for
the Ninth Circuit expressly approved the opposite result reached
in Bloedel’s Jewelry, Inc. v. Commissioner, 2 B.T.A. 611 (1925),
on the grounds that the case involved an accrual basis taxpayer.
The issue in Bloedel’s Jewelry was the treatment of a payment
made in 1920 for a lease term running from September 1920 through
August 1921, and the Court of Appeals in Zaninovich v.
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