Jay M. Anderson and Helen B. Anderson - Page 11

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            petitioner also ran a mortgage loan business.  Petitioners'                                 
            taxable income was derived from the following sources:7                                     
                  Source                            1989              1990                              

                  Interest                      $5,002             $2,011                               
                  Mortgage Business             (3,567)            5,079                                
                  Rental Income                 (1,743)            (1,196)                              
                  Capital Gains                   107,737            18,215                             
                  Total Income                  $107,428           $24,108                              
                  Petitioners filed joint Federal income tax returns for the                            
            taxable years 1989, 1990, and 1991.  In each of these years,                                
            petitioner deducted $33,333 in depreciation for the J car on a                              
            Schedule C.  He reported no income from this activity in any of                             
            the years.  Respondent disallowed the depreciation deductions                               
            related to the car on the ground that petitioner was not engaged                            
            in a trade or business for profit or an activity for production                             
            of income.  The year 1991 is not before the Court.                                          
                  The issue is whether petitioner may deduct depreciation for                           
            the J car in the amount of $33,333 per year for the taxable years                           
            1989 and 1990.  Petitioner contends that he was engaged in the                              
            business of selling the car, or copies of it, during the years at                           
            issue and that the car had a cost basis of $100,000.  Respondent                            
            disagrees with petitioner's position on both of these points.                               

            7 All amounts are rounded to the nearest whole dollar.  This                                
            rounding accounts for the apparent discrepancies in the totals.                             

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