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appraisals both value the space as a third-car garage, but, as
respondent recognizes, this approach mirrors the valuation of the
entire South Dakota property. And, as petitioners provided us
with no evidence to support any other valuation, this is the best
we can do on the record before us. See Rule 142(a); INDOPCO,
Inc. v. Commissioner, supra; Welch v. Helvering, supra.
4. Recapture From the Sale of the South Dakota Property
For 2000, petitioners deducted $346 as a depreciation
allowance on the South Dakota property’s workshop pursuant to
section 167. Respondent determined that the amount was subject
to recapture. Because petitioners are entitled to some loss on
the sale of the South Dakota workshop, there was no gain on its
sale, and we need not reach a conclusion on this issue. See also
sec. 1.1250-1(a)(5)(i), Income Tax Regs.; cf. secs. 121(d)(6),
1250(b)(3); sec. 1.121-1(e)(4), Example (5), Income Tax Regs. We
therefore do not sustain respondent’s determination regarding
recapture.
5. Itemized Deductions-2001, 2002, 2003
To the extent respondent made adjustments to petitioners’
itemized deductions because of changes determined in the notice
of deficiency, those adjustments should be modified to reflect
the other issues already conceded by the parties and those
discussed herein.
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Last modified: March 27, 2008