Charles R. Bowden and Sue I. Bowden - Page 19

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            and 1989 income tax returns.  Respondent challenges the claimed                            
            depreciation with respect to certain vending machines because                              
            petitioners failed to establish their ownership of or basis in                             
            those machines.  In that same vein, respondent also determined                             
            that petitioners are not entitled to certain other deductions                              
            related to the vending machines for the 1986 and 1989 tax years.                           
            Respondent also determined that petitioners failed to report                               
            income paid to them by or on their behalf by their corporations.                           
            Conversely, petitioners contend that they are entitled to                                  
            depreciate, as well as to deduct all related expenses with                                 
            respect to, the vending machines in question.                                              
            A.  Depreciation                                                                           
                  Petitioners contend that the assignments of security                                 
            interests in the vending machines gave them title and, therefore,                          
            ownership.  Consequently, petitioners contend that in 1986 they                            
            owned approximately 70 out of the 490 vending machines operated                            
            by their corporations.                                                                     
                  Respondent counters that:  (1) Petitioners have no capital                           
            investment in the vending machines; (2) there are no documents in                          
            the record which prove that petitioners owned the vending                                  
            machines; and (3) the vending machines have not been shown to                              
            have a useful life exceeding 1 year.                                                       
                  Deductions are a matter of legislative grace, and the                                
            taxpayer bears the burden of proving that he or she is entitled                            





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