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The exotic automobiles did not have license plates and were not
set up to be used on the street. They were not driven and were
used exclusively for car shows or related promotional
photography.
Petitioners claimed the following depreciation deductions
with regard to the exotic automobiles:
Depreciation Claimed In:
Automobile 1987 1988 1989 1990
Lotus Pantera $12,600 $20,160 $12,096 $7,258
Lotus Espirit 9,600 15,360 9,216 5,530
Gemballa Ferrari 58,091 92,945 55,767
Testarossa
Exotic Bodies, Inc. (the corporation), is a New Jersey
corporation. At all times here relevant, the corporation was
wholly owned by petitioner. The corporation was organized in
1987. For 1988, 1989, and 1990, the corporation was an
S corporation within the meaning of section 1361(a)(1). For
those years, the corporation made its Federal income tax returns
on the basis of a calendar year. The corporation was formed for
the purpose of putting together exotic cars for shows as well as
for cross-promoting different products (e.g., automobile-related
paraphernalia, such as T-shirts and frames for license plates).
The corporation was a marketing vehicle for the promotional
aspects of the exotic cars owned by petitioner.
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