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acquiring the vessel was to terminate the lease, and therefore,
it did not acquire property subject to a lease. We must decide
which party’s interpretation (or possibly whether both
interpretations) was intended. Under respondent’s position,
petitioner would be entitled to depreciate the acquisition cost
(approximately $108 million) over the remaining life of the
vessel. Petitioner, however, seeks to deduct 87 percent of the
acquisition cost (approximately $94 million) in the year of
acquisition of the vessel as the cost of terminating a burdensome
lease. The remaining amount (approximately $14 million) was to
be attributable to the depreciable basis of the vessel.
Ultimately, this controversy concerns the timing of deductions in
connection with petitioner’s acquisition of the vessel and its
attempt to terminate the lease.
There is no question about whether the vessel was subject to
a lease at the time it was acquired by petitioner. Petitioner
argues, however, that as a matter of proper grammatical syntax
the statutory language has been phrased to require that acquired
property must remain subject to a lease to come within the
allocation requirements of section 167(c)(2). Petitioner
suggests that Congress would have used the phrase “If any
property subject to a lease is acquired” to achieve the outcome
advanced by respondent. Petitioner contends that respondent
appears to treat the phrase “subject to a lease” as if it
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