Honeywell, Inc. v. Commissioner
United States Tax Court
P manufactured, leased, and sold computers and reported depreciation under the Class Life Asset Depreciation Range system described in sec. 1.167(a)-11(d)(3), Income Tax Regs. Literally applying the regulations, P reported sales of leased computers as credits to its depreciation reserve until the appropriate vintage account balance was exceeded, thereby delaying realization of income from sales.
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P manufactured, leased, and sold computers and reported depreciation under the Class Life Asset Depreciation Range system described in sec. 1.167(a)-11(d)(3), Income Tax Regs. Literally applying the regulations, P reported sales of leased computers as credits to its depreciation reserve until the appropriate vintage account balance was exceeded, thereby delaying realization of income from sales. R determined that computers held for sale and/or lease were "dual purpose property" not covered by his regulations. Held, P correctly reported income from sales of computers. P's subsidiary issued…
1Opinion of the Court
OPINION
COHEN, Judge:
Respondent determined deficiencies of $1,592,852 and $9,542,483 in petitioner’s Federal income taxes for 1976 and 1977, respectively. Certain of the adjustments in the statutory notice of deficiency have been resolved by agreement, and all of the facts have been stipulated. Three issues remain to be resolved on cross motions for partial summary judgment. They are:(1) Whether sales of leased equipment depreciated under the Class Life Asset Depreciation Range (CLADR) system constitute ordinary retirements under section 1.167(a)-11(d)(3), Income Tax Regs.;(2) Whether…
2Cases cited16 opinions
- Rowan Cos. v. United StatesSupreme Court of the United States · 1981
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- Cullinan v. Walker, Collector of Internal RevenueSupreme Court of the United States · 1923
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