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primarily used”, section 1.167(a)-11(b)(4)(iii)(b), Income Tax
Regs., cross-references paragraph (e)(3)(iii) “for [the] rule for
leased property”. The referenced paragraph provides: “In the
case of a lessor of property [claiming an allowance for
depreciation of leased property], unless there is an asset
guideline class in effect for lessors of such property, the asset
guideline class for such property shall be determined as if the
property were owned by the lessee.” (Emphasis added.) That
provision would be wholly unnecessary under the “industry usage”
rationale of the Court of Appeals in Duke Energy Natural Gas
Corp. v. Commissioner, supra.10 Moreover, the regulation
drafter’s analogy to deemed ownership by the lessee strengthens
the presumption that, in general (outside the special case for
leased property), it is the taxpayer-owner’s use of property that
determines its proper classification.
It is true that, in the case of the activity-based
classifications,11 Rev. Proc. 87-56, supra, does not specifically
10 Under that rationale, the fact that the property in
question is leased would have no bearing whatsoever on the
determination of the asset guideline class for such property, for
it is of no consequence whether the lessor or lessee of property
is considered the owner if, as stated by the Court of Appeals for
the Tenth Circuit in Duke Energy Natural Gas Corp. v.
Commissioner, supra at 1259, primary use of the property is
unrelated to ownership.
11 Some of the asset guideline classes set forth in Rev.
Proc. 87-56, 1987-2 C.B. 674, are based upon the type of property
(such as trucks or railroad cars) as distinguished from the
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