*147 MEMORANDUM FINDINGS OF FACT AND OPINION
WILBUR, Judge: This case was assigned to Special Trial Judge Darrell D. Hallett pursuant to
OPINION OF THE SPECIAL TRIAL JUDGE
HALLETT, Special Trial Judge: Respondent determined deficiencies in petitioners' Federal income tax as follows:
| Year | Deficiency |
| 1974 | $ 18.00 |
| 1975 | $ 619.00 |
| 1976 | $2,081.00 |
| 1977 | $ 230.00 |
| 1978 | $ 996.00 |
Due to concessions having been made by the petitioners, the sole issue for decision is whether the allowable investment credit with respect to used equipment acquired by petitioners and paid*148 for in part by a trade-in allowance on other equipment owned by petitioners is limited to the amount of additional consideration paid, or may be calculated based upon the total sales price of the equipment acquired.
This case was submitted fully stipulated without trial pursuant to
Petitioners were residents of Fresno, California at the time their petition was filed.
During 1970, petitioners purchased a used 1967 Kenworth tractor and a used 1969 utility dump. The investment tax credit was not in effect for the year 1970 and therefore petitioners neither claimed nor were allowed any credit with respect to the acquisition of this equipment. By 1977, petitioners had depreciated the equipment to the extent that it had an adjusted basis of zero.
In February 1977, petitioners purchased a used 1975 Peterbilt tractor and a used Fruehauf dump for a stated purchase price of $47,000. This property constitutes "used section 38 property" within the meaning of section 48(c)(1) and therefore qualifies for the investment tax credit.*149 In connection with the purchase of this used equipment in 1977, petitioners were given a trade-in allowance for the Kenworth tractor and the 1969 utility dump of $24,000 against the $47,000 total purchase price, and they financed the balance of the purchase price ($23,000) from a commercial lender.
The exchange of the equipment petitioners acquired in 1970 for the used equipment acquired in 1977 constitutes a like-kind exchange subject to the provisions of section 1031, so that no gain or loss is recognizable on the exchange. The parties also agree that the useful life of the used equipment acquired in 1977 was 7 or more years, such that the "applicable percentage" under section 46(c)(2) is 100 percent.
The parties have now stipulated that, for purposes of calculating the investment credit, a finance charge included by petitioners as part of the cost of the equipment acquired in 1977 is not properly includible in such cost. Accordingly, the parties agree that the only issue is whether the investment credit may be calculated based upon the stated sales price of $47,000 of the equipment acquired in 1977, as contended by petitioners, or whether the credit may only be claimed with*150 respect to the additional consideration paid, $23,000, as contended by the respondent. 3
Under sections 38 and 46(a)(2), an investment credit is allowable with respect to a percentage of the taxpayer's "qualified investment." Section 46(c)(1)(A) and (B) define the term "qualified investment" to mean, in the case of "new section 38 property," the basis of such property and, in the case of "used section 38 property," the cost of such property. The term "cost" as used in section 46(c)(1)(B) is not further defined in section 46. The term "used section 38 property" as used in this section is further defined in section 48(c)(1) to mean, in general, property acquired by purchase after December 31, 1961, which is not new section 38 property.
Further, section 48(c)(2) contains a total dollar limitation with respect to the aggregate cost of used section 38 property which may be taken into account in calculating the credit. Finally, section*151 48(c)(3) states:
Definitions. - For purposes of this subsection - * * *
(B) Cost. - The cost of used section 38 property does not include so much of the basis of such property as is determined by reference to the adjusted basis of other property held at any time by the person acquiring such property. If property is disposed of (other than by reason of its destruction or damage by fire, storm, shipwreck, or other casualty, or its theft) and used section 38 property similar or related in service or use is acquired as a replacement therefor in a transaction to which the preceding sentence does not apply, the cost of the used section 38 property acquired shall be its basis reduced by the adjusted basis of the property replaced. * * *
Petitioners sole contention in support of their claim that the investment credit with respect to the used property acquired during 1977 should be the full stated purchase price of $47,000 is that since petitioners neither claimed nor were*153 allowed an investment credit for the property traded in (because the investment credit was not then in effect), they should not be limited in the calculation of the credit to the adjusted basis of the property acquired. In particular, petitioners do not contend that
Further, petitioners' *155 argument that the property they traded in should not be considered "used section 38 property" because it was acquired at a time when section 38 was not in effect overlooks the fact that the allowance of the credit does not depend upon whether the property traded in constitutes used section 38 property, but whether the property acquired constitutes such property. If the property acquired does qualify as used section 38 property, then the credit is allowable with respect to its "cost", which respondent's treasury regulations interpret to mean the basis of the property acquired, less the adjusted basis of the property traded in. Indeed, petitioners make no argument whatsoever that the applicable Code provisions or the regulations, as written, lend themselves to the interpretation which petitioners suggest. Petitioners simply ask us to write into the statutes an exception which does not exist, which we have no authority to do.
Decision will be entered under Rule 155.
Footnotes
1. All section references re to the Internal Revenue Code of 1954, as amended, unless otherwise indicated. ↩
2. The Court has concluded that the post-trial procedures of
Rule 182, Tax Court Rules of Practice and Procedure↩ , are not applicable in these particular circumstances. This conclusion is based upon the authority of the "otherwise provided" language of that rule.3. The parties agree that the sales tax amounting to $2,820, which petitioners elected to capitalize, may be added to the base upon which investment credit is calculated. For simplicity, we have eliminated the sales tax for purposes of analysis.↩
4. Sections 46(c)(1)(B) and 48(c)(3)(B) provide that the credit in the case of used property is to be based upon cost. The above cited treasury regulations, as applied to the facts of this case, provide that "cost" is the basis of the property acquired less the adjusted basis, if any, of the property traded in. After this case was initially submitted for decision, the Court requested the parties to address the question as to whether the regulations, as applied to this case, are a valid interpretation of the statutes. Petitioners responded by conceding that the regulations are valid and they made no contention that, contrary to the regulations, the term "cost" as applied to a trade-in situation means the amount paid for the property acquired, and not its basis. Accordingly, we do not address the issue as to the validity of the regulations in this regard.↩