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LaSalle Trucking Co. v. Commissioner, T.C. Memo. 1963-274
(considerable evidence that trucking company's replacement
components, i.e., truck engines, cabs, and fuel tanks, were
independent capital assets). Whether the cell lining is a
separate asset is not determinative of whether its replacement
cost may be deducted or must be capitalized.
The cell unit comprises components with varying useful
lives. However, the cell lining is an essential and substantial
component without which the cell cannot function. According to
normal experience, the cells operate for approximately 3 years
before the lining is exhausted. Once the lining fails, the cell
must be taken out of the pot line and cannot be put back in
operation until the lining has been removed and replaced in an
expensive, time-consuming procedure. Cf. Buffalo Union Furnace
Co. v. Commissioner, 72 F.2d 399, 402 (2d Cir. 1934), revg. 23
B.T.A. 439 (1931). This inescapable cycle of exhaustion and
restoration is repeated approximately every 3 years by every
cell. Consequently, although some of the components of the cell
may have useful lives longer than that of the cell lining, the
productive phase of each cell's cycle ends upon the exhaustion of
its lining. Cf. Ruane v. Commissioner, T.C. Memo. 1958-175.
In replacing the lining the cell essentially is rebuilt,
thereby obtaining a new life expectancy of 3 years. See Electric
Energy, Inc. v. United States, 13 Cl. Ct. 644, 667 (1987)
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