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determined that the change in deductions for depreciation was a
change in accounting method for which an adjustment pursuant to
section 481(a) was required for the tax year ended in 1996.
At trial, petitioner conceded that respondent’s
determination relating to the deductions for depreciation is
correct. Petitioner conceded that each item of the Equipment
should be reclassified under MACRS, alternative depreciation
system rules, in accordance with section 168(g)(1)(A), and
depreciated using the straight-line method and a 10-year recovery
period.
Petitioner continues to challenge respondent’s determination
relating to the adjustment pursuant to section 481(a) on
multiple, alternative grounds. First, petitioner claims that a
change in MACRS classification is not a change in method of
accounting for which section 481(a) requires an adjustment.
Second, petitioner claims that fairness should prevent an
adjustment under section 481(a) because respondent’s agent
reviewed and accepted petitioner’s method of depreciation and
accumulated depreciation during an examination of petitioner’s
tax years ended in 1992 and 1993. Finally, on brief, petitioner
argues that respondent should not be allowed to assert an
adjustment pursuant to section 481(a) without considering and
applying section 481(b).
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Last modified: May 25, 2011