ABC Rentals of San Antonio, Inc., et al. - Page 11




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          respondent became aware of any additional facts that rendered his           
          position any more or less justified between the issuances of the            
          notices of deficiency and the filing of the answer to the                   
          petitions.                                                                  
               Respondent contended that only property whose economic                 
          usefulness cannot be adequately measured by its physical                    
          condition or the passage of time and that may produce an uneven             
          stream of income is properly depreciated under the income                   
          forecast method.  Respondent’s position was based on the                    
          reasoning of Rev. Rul. 60-358, 1960-2 C.B. 68.  In that ruling,             
          the Commissioner determined that the usefulness of a television             
          film was more adequately measured by reference to the income it             
          produced than by the passage of time alone.  The ruling                     
          explicitly stated that the income forecast method was “limited in           
          its application to television films, taped shows for                        
          reproduction, and other property of similar character.”  Rev.               
          Rul. 60-358, 1960-2 C.B. at 70 (emphasis added).  In later                  
          revenue rulings, the Commissioner amplified Rev. Rul. 60-358,               
          1960-2 C.B. by authorizing the use of the income forecast method            
          to depreciate motion picture films, see Rev. Rul. 64-273, 1964-2            
          C.B. 62, book manuscripts, patents, and master recordings, see              
          Rev. Rul. 79-285, 1979-2 C.B. 91.  These rulings were based on              
          section 167, which was, at the time the rulings were issued, the            
          only provision governing depreciation.  In the late 1980's, after           






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