Brookshire Brothers Holding, Inc. and Subsidiaries - Page 15

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          property will be depreciated, there would appear to be no                   
          meaningful difference for purposes of the exception in section              
          1.446-1(e)(2)(ii)(b), Income Tax Regs.                                      
               However, the foregoing analogy is complicated by the fact              
          that, as presently codified in section 168, MACRS inextricably              
          links recovery period and depreciation method.  A                           
          reclassification thus can affect not only the time over which               
          deductions are taken but also the methodology by which those                
          deductions are calculated.  Such linkage generally did not exist            
          under earlier statutes2, and previous case law indicates that a             
          change in depreciation method was not excluded from the consent             
          requirement.  See Standard Oil Co. (Indiana) v. Commissioner, 77            
          T.C. 349, 410-411 (1981); Casey v. Commissioner, 38 T.C. 357,               
          384-387 (1962).                                                             
               Hence, we are faced with a choice.  On one hand, to adopt              
          petitioner’s approach and rule that a reclassification of                   
          property under MACRS should be treated as synonymous with an                
          adjustment in useful life for purposes of the regulatory                    
          exception would broaden the exception to cover changes not only             
          in the period for depreciation but also potentially in the method           

               2  There were some exceptions, see, e.g., former sec. 167(c)           
          (accelerated depreciation is available only for property with a             
          useful life of 3 years of more); former sec. 167(j)(5) (sec. 1250           
          property that is used residential real property qualifies for a             
          125 percent declining balance method if the property has a useful           
          life of 20 years or more).                                                  

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