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$63,481 (82.19 percent) of that distribution). A document
purporting to be the contract by which was created the Caralan
Trust is in evidence. It does not apportion the depreciation in
question to the J. Shirleys. Given the amount of the trust’s
income and the relative size of the income distribution to the
J. Shirleys, they are entitled to no more than 17.81 percent of
any deduction for depreciation on property held by the trust.
See sec. 1.167(h)-1(b)(2), Income Tax Regs. (depreciation on
trust property is split in proportion to income unless the
governing instrument or local law requires or permits the trustee
to maintain a reserve for depreciation and such reserve is in
fact maintained). Moreover, the J. Shirleys have failed to prove
any property held by Caralan Trust was property used in a trade
or business, or held for the production of income, for which a
depreciation deduction is available under section 167(a). We
have found that the claimed depreciation deduction of $19,896 was
with respect to property that the J. Shirleys used as (and in)
their personal residence. Generally, no deduction is allowed
“for personal, living, or family expenses.” Sec. 262(a). The
J. Shirleys have proposed no facts with respect to the activities
of Caralan Trust that could lead us to find that the property in
question was used in a trade or business or was held for the
production of income. Apparently, the property was rented to
Alexion Trust at a loss in a transaction that, from the
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