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Then, on July 15, 1996, petitioner filed with the Internal
Revenue Service an Amended U.S. Corporation Income Tax Return,
Form 1120X, for each of the tax years ended in 1993 through 1995.
On these amended returns, petitioner reclassified the gas
stations as 15-year property under the MACRS rules and,
consistent therewith, recalculated depreciation utilizing the 150
percent declining balance method and a 15-year recovery period.
Petitioner also included the following explanation with each Form
1120X: “THE DETERMINATION WAS MADE THAT GAS STATION CONVENIENCE
STORES SHOULD BE RECLASSED FROM 31.5 AND 39 YEAR PROPERTY TO 15
YEAR PROPERTY BASED ON THE ATTACHED MEMO.” The memo so
referenced and attached was a copy of an Industry Specialization
Program Coordinated Issue Paper for Petroleum and Retail
Industries (ISP paper).
The ISP paper, issued by the Internal Revenue Service with a
stated effective date of March 1, 1995, set forth the test under
which a convenience store would qualify as 15-year property,
rather than nonresidential real property, for MACRS depreciation
purposes. In general, the ISP paper required that the store be
used primarily to market petroleum products. At some time
thereafter, the Internal Revenue Service issued to petitioner
refunds of the full amount claimed in the amended returns for
years ended in 1993 and 1994 and a partial refund of the amount
claimed for the year ended in 1995.
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