Clajon Gas Co., L.P., Aquila Gas Pipeline Corp., Tax Matters Partner - Page 15

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                    Because of the primary use of gathering systems in                
               the process of producing natural gas, as well as the                   
               plain language of the asset class descriptions, Duke’s                 
               gathering systems fit more logically within Asset Class                
               13.2 than Asset Class 46.0.  [Fn. ref. omitted.]                       
          Id. at 1262.6                                                               
          V.  Nonapplication of Golsen v. Commissioner                                
               Under the rule of Golsen v. Commissioner, 54 T.C. 742, 757             
          (1970), affd. 445 F.2d 985 (10th Cir. 1971), this Court will                

               6  The Court of Appeals for the Tenth Circuit distinguishes            
          between “gathering pipelines”, which “fall within Asset Class               
          13.2", and “trunk lines and related storage facilities”, which              
          “fall within Asset Class 46.0", stating that “it is undisputed              
          that trunk lines and gathering systems are mutually exclusive               
          terms referring to different types of pipeline systems.”  Duke              
          Energy Natural Gas Corp. v. Commissioner, 172 F.3d 1255, 1259               
          (10th Cir. 1999), revg. 109 T.C. 416 (1997).  Petitioner argues             
          that Clajon’s trunk lines are part of its gathering system and,             
          like the rest of the system, must be included within 13.2.                  
          Petitioner urges that we distinguish the Court of Appeals’                  
          classification of trunk lines on the basis that that court must             
          have considered Duke Energy’s trunk lines to be transmission                
          rather than gathering pipelines.  Because we conclude that all of           
          the pipelines in the Texas gathering systems fall within 46.0, we           
          need not address the Court of Appeals’ refusal to treat trunk               
          lines as part of the gathering system for asset classification              
               In concluding that petitioner’s trunk lines are includable             
          within 46.0, we obviously reject petitioner’s suggestion that the           
          specific inclusion, within 46.0, of “trunk lines * * * of                   
          integrated * * * natural gas producers” necessarily implies the             
          exclusion of its trunk lines from that asset class (since it is             
          not an integrated natural gas producer).  We view the quoted                
          language as simply intended to clarify that an integrated                   
          producer’s trunk lines are not to be considered gathering                   
          pipelines includable within 13.2.  That language has no bearing             
          upon the inclusion, within 46.0, of trunk lines owned and used by           
          a pipeline company like petitioner.                                         

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