Harm De Boer - Page 5

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          deeper than the first rig.4  Petitioner also purchased diesel and           
          electric welding equipment for $3,500.  Later during the year,              
          petitioner purchased "Inner Kelly" equipment for use with the               
          recently purchased rig, at a cost of $30,962.                               
               Although the second drill rig was in working order when                
          purchased by petitioner, he spent substantial time and money                
          renovating it, and keeping it in working order.  From the end of            
          May 1985, through the beginning of July 1987, petitioner had no             
          employment other than his drilling operation, and devoted the               
          bulk of his waking hours working on the drill rig and looking for           
          jobs on which he could use it.  Notwithstanding that petitioner             
          engaged in wage-earning employment after July 1987 for various              
          employers (see infra p.7), he continued to spend substantial time           
          on activities under the name "De Boer Drilling Co."  Petitioner             
          spent approximately 80 percent of this time working on the drill            
          rig and 20 percent looking for drilling jobs.                               
               For the purchase price and capital costs of work done on the           
          second drill rig from 1985 through 1989, petitioner claimed cost            
          recovery deductions of approximately $88,000.  Petitioner also              
          claimed expense deductions for De Boer Drilling Co. of                      
          approximately $113,000 during 1985 through 1991.  During this               


          4The second drill rig is a Hughes Tool Co. Model TAP-120T,                  
          also approximately 12 feet wide and 70 feet long, and weighing              
          approximately 150,000 pounds.  This rig is capable of drilling              
          holes from 18 inches in diameter to 120 inches in diameter and              
          can dig efficiently to a depth of 120 feet.                                 



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