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The majority interpret section 1.167(a)-11(b)(4)(iii)(b),
Income Tax Regs., as if it read that the property shall be
classified according to the “taxpayer’s primary use”. See
majority op. p. 19 (emphasis added). We, however, must take the
law as we find it. The regulation specifically states that our
focus is the property’s primary use. Moreover, the language of
asset class 13.2 requires only that the asset be “used by” a
natural gas producer in the production of natural gas. Clajon’s
gathering systems meet the requirement even though Clajon was not
a producer.
IV. Conclusion
The plain language of asset class 13.2 does not require that
a gathering system be “owned by” a natural gas producer to be
included in that asset class. While respondent is free to issue
revised guidance, Rev. Proc. 87-56 simply requires that a
gathering system be “used by * * * a natural gas producer” in
order to fall within asset class 13.2. The TGS is so used.
Accordingly, the majority’s conclusion is incorrect, and
petitioner is entitled to recover the cost of the gathering
systems over a 7-year period.
WELLS, SWIFT, BEGHE, VASQUEZ, and MARVEL, JJ., agree with
this dissenting opinion.
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