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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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