Volume 72, Number 5

November 1997

“Useful Life” Has Outlived Its Useful Life: Tax Depreciation After Simon and Liddle

Alton A. Murakami

By eliminating the useful life requirement for depreciability, Simon and Liddle opened the door to allowing depreciation of assets previously considered nondepreciable. Although the amounts at issue in the two cases were not significant, applying their holding to other assets could significantly reduce the tax revenues collected by the government. This Note analyzes the tax court’s decisions in Simon and Liddle and applies their holding to assets previously considered nondepreciable. This Note concludes that the Simon and Liddle decisions are contrary to the legislative history of ACRS depreciation, but argues that eliminating the useful life requirement for tangible assets is nevertheless fundamentally sound, as it better promotes the basic policies and practical considerations underlying modem tax depreciation.