Rev. Rul. 59-249

Advice has been requested whether the cost of tires and tubes purchased on new commercial trucking equipment and used in motor freight transportation is deductible as an expense in the taxable year of purchase if their average useful life in such use is less than one year.

The taxpayer is engaged in the business of motor freight transportation, as a Class 1 Motor Carrier of Property under authority of the Interstate Commerce Commission. The cost of new trucks, tractors and trailers purchased for use in the conduct of the business is treated by the taxpayer as a capital expenditure to be depreciated over their estimated average useful life therein of several years. However it is alleged that the tires and tubes mounted on the new equipment have an average useful life in such use of less than one year; hence, the taxpayer desires to treat the cost of these tires and tubes as business expenses deductible in full in the taxable year of purchase.

In W. H. Tompkins Co. v. Commissioner , 47 B.T.A. 292, where it was found that the average useful life of tires and tubes similarly acquired and used in 1939 did not exceed 90 days and that their maximum useful life was six months, it was held that their cost was deductible in full as business expense in the taxable year purchased `when consumable within the year.' The court said that while `it is obvious that we cannot allow as an expense every part of the mechanism of the trucks which might wear out within less than a year', their tires `are not a part of the truck's mechanism, closely interrelated with other parts and affected by those parts in their wear and tear'. A motion, filed for the Commissioner, for review by the entire Board of the opinion was denied.

In Interstate Truck Service, Inc. v. Commissioner , T.C. Memo. 1958-219, involving tires and tubes similarly acquired and used in 1952 and 1953, it was found that such tires `were on the average consumable in less than one year' and, although no specific finding as to the useful life of the tubes was expressly by the court, it is presumed that it actually found that they had a corresponding average useful life inasmuch as it held that the costs of both the tubes and tires involved were business expenses deductible in full in the taxable year of purchase and payment (aggregating $7,080.34 for 1952 and $16,043.82 for 1953). Since the record of the case shows that some of the tires and tubes involved therein were acquired near the end of each of the taxable years concerned (in December 1952 and in October and November 1953), it is evident that not all of the tires and tubes involved therein were consumable within the taxable year of purchase as in the Tompkins case, but that the useful life of some of them extended in part into each following year.

The Internal Revenue Service is following the aforecited decisions. Accordingly, the cost of tires and tubes purchased on new commercial trucking equipment and used in motor freight transportation is deductible as ordinary and necessary business expense in full in the taxable year of purchase and payment (or accrual, where such method of accounting is regularly employed, for Federal income tax purposes, by the taxpayer) if in such use they are consumable within that year or their average useful life is less than one year even though it extends in part into the next year.