- 20 -
consider in determining estimated useful life include exhaustion;
wear and tear or decline from natural causes; obsolescence;
economic changes; inventions; current developments in the
industry and the taxpayer’s trade or business; climatic or other
local conditions peculiar to the trade or business; and the
taxpayer’s policy as to repairs, renewals, and replacements.
Sec. 167; sec. 1.167(a)-1(b), Income Tax Regs.
The taxpayer is responsible for establishing the
reasonableness of the deduction for depreciation. Sec. 1.167(b)-
0(a), Income Tax Regs. Generally, depreciation deductions so
claimed will be changed only where there is a clear and
convincing basis for a change. Id.
The parties disagree on the useful life of the garments and
dust control items. Petitioner contends that it made a
reasonable approximation of the useful life of its garments and
dust control items based on its business practices and that there
was no clear and convincing basis for a redetermination of the
useful life by respondent. Petitioner approximated that the
useful life of its garments and dust control items was less than
1 year or not substantially in excess of 1 year.
The useful life determined by respondent was 4 to 10 years
for mats, 4 to 10 years for mops, 1 to 4 years for towels, 2 to
4 years for industrial garments, and 4 to 10 years for clean room
garments. Respondent primarily relies on an expert report and
Page: Previous 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 NextLast modified: May 25, 2011