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respondent both used petitioner’s useful life experience to
determine the useful life of the customer accounts acquired from
Rose.23 The parties disagree about the degree of similarity
necessary before a taxpayer can use its own experience to
determine the useful life of an acquired asset.
Respondent contends that petitioner is not entitled to use
its own experience because it has not shown that the acquired
Rose accounts are similar to petitioner’s accounts. To that end,
respondent argues that historical information was not available
on the Rose accounts and that the information that was available
reflected that Rose’s active accounts had declined and were older
than petitioner’s and that there were categorical differences
between them.24
Petitioner contends that Mr. Dodds’s testimony regarding the
similarity of petitioner’s and Rose’s accounts was sufficient to
22(...continued)
taking into account present conditions and probable
future developments. * * * If the taxpayer’s experience
is inadequate, the general experience in the industry
may be used until such time as the taxpayer’s own
experience forms an adequate basis for making the
determination. * * *
23 Respondent argues that Rose’s experience should have been
used, but that respondent’s expert was forced to use petitioner’s
data because insufficient Rose data was available.
24 Respondent’s argument that the Rose customers varied
substantially from petitioner’s customers is, to a great extent,
paradoxical. Respondent acknowledges that there is insufficient
Rose data. Notwithstanding that acknowledgment, respondent saw
fit to argue that the Rose accounts are dissimilar from
petitioner’s accounts.
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