Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the taxable years before the Court, and all Rule references are to the Tax Court Rules of Practice and Procedure. After concessions by both parties,1 the remaining issue for decision is whether petitioners may deduct depreciation in the amount of $33,333 in each of the taxable years 1989 and 1990 for a prototype automobile built by petitioner Jay M. Anderson.2 In reaching our decision, we must decide: (1) Whether petitioner Jay M. Anderson was engaged in a trade or business related to the automobile or held the automobile for production of income or, conversely, whether the activity related to the automobile was one "not engaged in for profit" within the meaning of section 183, and (2) whether petitioner has substantiated his basis in the automobile. 1 Respondent conceded the issue of the sec. 6651(a)(1) addition to tax for the taxable year 1989. Petitioners conceded the following adjustments to income: 1989 1990 Capital gains $960 $13,350 Depreciation-mortgage business (350) 825 Auto rental expense (51) -- Depreciation-rental property -- 381 Miscellaneous itemized deductions 3,534 2,096 Other car expenses 4,933 -- 2 That decision also will determine petitioners' medical expense deductions for 1989 and 1990, and the self-employment tax for 1990, since the adjustments to these items are purely computational.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
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