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service on May 28, 1996.4 The Oregon State Marine Board listed
VVI as the owner and petitioner as the coowner.5
The new houseboat was approximately 43 feet long and 28 feet
wide. It had one floor with three rooms including a living area,
a photo studio, and office space, and an open air deck on top
which included an outdoor cafe. Adjacent to the new houseboat
was the floating garage where petitioner’s boat and jet skis and
VVI’s tables and chairs were stored. The garage was covered and
securely locked.
Petitioner and VVI shared the costs of the floating
structures’ construction. Petitioner paid $80,717 in 1995 and
VVI paid a total of $185,327: $95,046 in FYE June 30, 1995, and
$90,281 in FYE June 30, 1996. Petitioner was not reimbursed.
VVI capitalized the $185,327 and planned to depreciate the costs
over a 39-year period. VVI reported these expenditures on its
Forms 4562, Depreciation and Amortization, as leasehold
improvements involving nonresidential real property.
VVI and UMI used the floating structures for promotional
events, meetings, and advertising photo shoots. Petitioner used
the floating structures for personal purposes approximately 10
4 VVI’s Form 4562, Depreciation and Amortization, reported
the property was placed into service on May 28, 1996.
5 Petitioner claimed that only VVI owned the floating
structures and he was listed as a coowner because the State
required an individual contact.
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Last modified: November 10, 2007