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determination, and in each case the U.S. Court of Appeals has
affirmed the decision of this Court. See Arevalo v.
Commissioner, supra; Crooks v. Commissioner, supra. In short,
this Court and the Courts of Appeals have consistently held that
a taxpayer’s investment in an arrangement involving pay phones
marketed by Alpha Telcom, Inc. (Alpha Telcom), and its wholly
owned subsidiary American Telecommunications Co., Inc. (ATC), did
not support either: (1) A depreciation deduction under section
167 because the taxpayer did not have the requisite benefits and
burdens of ownership to support a depreciable interest in the pay
phones; or (2) a disabled access credit under section 44, because
the investment was not an eligible access expenditure.
B. Background
Alpha Telcom marketed a pay phone investment program through
ATC to thousands of investors nationwide. Alpha Telcom
represented that the pay phones included modifications such as
longer cords, volume controls, and/or other features that
facilitated their use by persons with disabilities. Alpha Telcom
also represented to investors that the modifications made to the
pay phones complied with the requirements of the Americans with
Disabilities Act of 1990 (ADA), Pub. L. 101-336, 104 Stat. 327.
On June 2, 2001, petitioners entered into separate contracts
with ATC entitled “Telephone Equipment Purchase Agreement” (ATC
pay phone agreements) to purchase a total of seven pay phones at
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Last modified: March 27, 2008