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and depreciated over the life of the relevant asset”. INDOPCO,
Inc. v. Commissioner, 503 U.S. 79, 83-84 (1992). This Court has
held that the determination of whether an expenditure constitutes
a capital expenditure or a currently deductible expense involves
the question of the proper time for taking a deduction. See
Pelaez & Sons, Inc. v. Commissioner, 114 T.C. 473, 489 (2000);
Southern Pac. Transp. Co. v. Commissioner, 75 T.C. 497, 683
(1980), supplemented by 82 T.C. 122 (1984); Hooker Indus., Inc.
v. Commissioner, T.C. Memo. 1982-357; sec. 1.446-1(e)(2)(ii)(a),
Income Tax Regs. An accounting practice involving the timing of
when an item is deducted is considered a method of accounting.
See GMC & Subs. v. Commissioner, 112 T.C. 270, 296 (1999);
Knight-Ridder Newspapers, Inc. v. United States, 743 F.2d 781,
797-798 (11th Cir. 1984).
In Southern Pac. Transp. Co. v. Commissioner, supra, we
applied section 1.446-1(e)(2)(ii)(b), Income Tax Regs., for
purposes of deciding whether the expenditures in issue were for a
“material item”. Section 1.446-1(e)(2)(ii)(b), Income Tax Regs.,
provides that “a correction to require depreciation in lieu of a
deduction for the cost of a class of depreciable assets which had
been consistently treated as an expense in the year of purchase
involves the question of the proper timing of an item, and is to
be treated as a change in method of accounting.” Although the
taxpayer in Southern Pac. Transp. Co. v. Commissioner, supra, was
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