Brookshire Brothers Holding, Inc. and Subsidiaries - Page 6

                                        - 6 -                                         
               After filing the amended returns for prior years, petitioner           
          filed original Forms 1120 for the years ended in April of 1996              
          and April of 1997.  On these returns, the gas stations were                 
          classified and depreciated as 15-year property.  Petitioner at no           
          time filed a Form 3115, Application for Change in Method of                 
          Accounting, with respect to the gas station properties.                     
               Respondent subsequently examined petitioner’s returns for              
          the tax years ended in 1996 and 1997 and issued a notice of                 
          deficiency with respect to those years on December 8, 1998.                 
          Therein, respondent determined, among other things, that                    
          petitioner’s deductions for depreciation must be decreased                  
          because petitioner, in treating the gas stations as 15-year                 
          property, had engaged in a change of accounting method without              
          the consent of the Commissioner.  Respondent computed the amount            
          of such decreases in depreciation expense as being $302,101 and             
          $257,833 for the years ended in 1996 and 1997, respectively.  The           
          corresponding increases in taxable income resulted in                       
          deficiencies that are the subject of this litigation.                       
          I.  General Rules                                                           
               A.  Accounting Methods                                                 
               As a threshold premise, section 446(a) sets forth the                  
          general rule that “Taxable income shall be computed under the               
          method of accounting on the basis of which the taxpayer regularly           

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  Next

Last modified: May 25, 2011