Rev. Rul. 60-317

The Internal Revenue Service will not follow the decision of the United States Court of Appeals for the Eighth Circuit in Northern Natural Gas Company v. O'Malley and Northern Natural Gas Company v. McCrory, 277 Fed. (2d) 128.

The point at issue in these cases was whether the taxpayer was entitled, under section 23(l) of the Internal Revenue Code of 1939, to a depreciation deduction based upon exhaustion of its right-of-way easements for its pipelines used to transmit gas for considerable distances; the easements provided they shall continue "so long as such pipelines and appurtenances thereto shall be maintained."

It is the position of the Service that the assets were not entitled to a depreciation deduction because their useful life in the business could not be estimated with reasonable certainty as required by section 29.23(l)-3 of Regulations 111.

Accordingly, while it has been determined that review by the Supreme Court of the United States will not be requested, the decision in the Northern Natural Gas Company cases will not be followed as a precedent in the disposition of similar cases pending further developments on the issue.

¹ Based on Technical Information Release 251, dated September 6, 1960.