[Code of Federal Regulations]
[Title 26, Volume 2]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.167(a)-9]

[Page 934]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.167(a)-9  Obsolescence.

    The depreciation allowance includes an allowance for normal 
obsolescence which should be taken into account to the extent that the 
expected useful life of property will be shortened by reason thereof. 
Obsolescence may render an asset economically useless to the taxpayer 
regardless of its physical condition. Obsolescence is attributable to 
many causes, including technological improvements and reasonably 
foreseeable economic changes. Among these causes are normal progress of 
the arts and sciences, supersession or inadequacy brought about by 
developments in the industry, products, methods, markets, sources of 
supply, and other like changes, and legislative or regulatory action. In 
any case in which the taxpayer shows that the estimated useful life 
previously used should be shortened by reason of obsolescence greater 
than had been assumed in computing such estimated useful life, a change 
to a new and shorter estimated useful life computed in accordance with 
such showing will be permitted. No such change will be permitted merely 
because in the unsupported opinion of the taxpayer the property may 
become obsolete. For rules governing the allowance of a loss when the 
usefulness of depreciable property is suddenly terminated, see Sec. 
1.167(a)-8. If the estimated useful life and the depreciation rates have 
been the subject of a previous agreement, see section 167(d) and Sec. 
1.167(d)-1.