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Petitioner argues that there is a genuine issue of material
fact as to how petitioner determined its method of depreciation.
Petitioner contends that it did not base its depreciation
deductions upon the wear and tear or physical exhaustion of the
equipment, but upon outside factors that influenced the
equipment’s income-producing ability, including the uncertainty
of whether California would change its gaming laws with respect
to this type of equipment, changes in public taste because of
advancements in technology, and petitioner’s experience with
similar equipment.
We conclude that there is no genuine issue as to any of the
material facts regarding the method petitioner used to depreciate
its equipment. As reflected on petitioner’s tax returns,
petitioner depreciated its equipment using a straight-line method
over a 2-year period.
II. The Section 168(f)(1) Election
A. In General
Deductions are a matter of legislative grace; petitioner has
the burden of showing that it is entitled to any deduction
claimed. Rule 142(a); New Colonial Ice Co. v. Helvering, 292
U.S. 435, 440 (1934).
The Internal Revenue Code provides taxpayers with a
depreciation deduction for the exhaustion, wear and tear, or
obsolescence of property used in a trade or business. Sec.
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