Bruce Selig and Elaine Selig - Page 1

                                 T.C. Memo. 1995-521                                  

                               UNITED STATES TAX COURT                                

                    BRUCE SELIG AND ELAINE SELIG, Petitioners v.                      
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      

               Docket No. 19151-93.           Filed October 31, 1995.                 

                    P exhibited "exotic automobiles", state-of-the-                   
               art, high technology vehicles with unique design                       
               features or equipment, for a fee.  Ps claimed                          
               depreciation deductions for such automobiles.  P's                     
               wholly owned S corporation made expenditures related to                
               P's plans to open an exotic car entertainment complex.                 
                    1.  Held:  The exotic automobiles were subject to                 
               obsolescence and, thus, were depreciable under secs.                   
               167 and 168, I.R.C.                                                    
                    2.  Held, further, the expenditures made by P's                   
               wholly owned S corporation are nondeductible under sec.                
               162(a), I.R.C., on account of being preopening expenses                
               not incurred in a trade or business of the corporation.                
                    3.  Held, further, the sec. 6661, I.R.C.,                         
               additions to tax and sec. 6662, I.R.C., penalties                      
               determined by respondent are, in part, sustained.                      

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