Armco, Inc. v. Commissioner
United States Tax Court
1. P is engaged in the production of steel and steel products. For its 1976 and 1977 taxable years, P elected to apply the percentage repair allowance (PRA) for ferrous metals. Under the PRA, an electing taxpayer could deduct currently, as a repair expense, a prescribed percentage of the unadjusted basis of the property within a specified class of assets without challenge from R if it agreed to capitalize any remaining repair expenses attributable to that class.
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1. P is engaged in the production of steel and steel products. For its 1976 and 1977 taxable years, P elected to apply the percentage repair allowance (PRA) for ferrous metals. Under the PRA, an electing taxpayer could deduct currently, as a repair expense, a prescribed percentage of the unadjusted basis of the property within a specified class of assets without challenge from R if it agreed to capitalize any remaining repair expenses attributable to that class. Rev. Proc. 72-10 provided an 8-percent PRA for ferrous metals during the years in issue. R knew the methodology used to derive the…
1Opinion of the Court
WILLIAMS, Judge:
The Commissioner determined deficiencies in petitioner’s Federal income tax for the taxable years 1975, 1976, and 1977 as follows:
Year Deficiency
1975 . $1,038
1976 . 6,763,836
1977 . 6,432,232
The year 1975 is before the Court only because certain adjustments in 1976 affect the computation of the tax for 1975. The deficiencies for 1976 and 1977 include increased deficiencies asserted by respondent in his second amendment to answer in docket No. 20037-85 and third amendment to answer in docket No. 45229-85.,Petitioner claims an overpayment of tax of not less than $695,932 for…
2Cases cited20 opinions
- Allen v. WrightSupreme Court of the United States · 1984
- United States v. CorrellSupreme Court of the United States · 1967
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- Rowan Cos. v. United StatesSupreme Court of the United States · 1981
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