The IRS argued before the Tax Court that in order to be treated as incurring “geological and geophysical expenses” that are eligible for preferential treatment under IRC §167(h) the taxpayer must actually own oil and gas interests. However the Tax Court did not accept that view, allowing the treatment to the taxpayer in the case of CGG Americas, Inc. v. Commissioner, 147 TC No. 2.vv

The concept of “placed in service” for purposes of beginning to deduct depreciation is often a tricky one to deal with in real life, and the date of placing an item in service may not be as simple as some might believe.  Certainly, in the case of Stine, LLC v. United States, 115 AFTR 2d ¶ 2015-381, DC LA, the IRS’s view of a “bright line” test based on a when a building was open for business was rejected by the Court.