Brookshire Brothers Holding, Inc. and Subsidiaries - Page 4




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          depreciation for tangible assets placed in service after 1986               
          under the modified accelerated cost recovery system (MACRS), in             
          accordance with section 168.                                                
               On its U.S. Corporation Income Tax Return, Form 1120, for              
          the year ended April 24, 1993, petitioner began depreciating the            
          gas station properties.1  In doing so, petitioner characterized             
          the gas stations as nonresidential real property.  Petitioner               
          likewise classified the gas stations as nonresidential real                 
          property on its returns for the taxable years ending in April of            
          1994 and April of 1995.  On the basis of such classification and            
          the prescribed treatment for nonresidential real property under             
          the MACRS rules, petitioner’s returns for the years ended in                
          1993, 1994, and 1995 reflected depreciation of the gas stations             
          using the straight line method and a recovery period of 31.5 or             
          39 years.  (The Omnibus Budget Reconciliation Act of 1993, Pub.             
          L. 103-66, sec. 13151, 107 Stat. 448, extended the recovery                 
          period for nonresidential real property from 31.5 to 39 years,              
          generally effective for property placed into service after May              
          12, 1993.)                                                                  




               1  Although the parties stipulated that petitioner began               
          depreciating the gas stations in the year ending in 1992, this              
          appears to be erroneous because petitioner’s return for the                 
          fiscal year ending April 25, 1992, does not reflect any such                
          deductions on the depreciation schedule.  We therefore rely on              
          the Form 1120 for that fiscal year.  See Jasionowski v.                     
          Commissioner, 66 T.C. 312, 316-318 (1976).                                  




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