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Cavalier's fair market value. Respondent relied on the National
Automobile Dealers Association (NADA) used car guide for the fair
market value.
The basis of property which has not been used in the trade
or business and which is thereafter converted to such use is the
lesser of fair market value on the date of conversion or the
adjusted basis on the date of conversion. Sec. 1.167(g)-1,
Income Tax Regs. Because petitioner converted the Cavalier to
business use, the appropriate basis for depreciation is fair
market value. Petitioner provided no evidence as to the
Cavalier's fair market value on June 1, 1990, the date of
conversion. Consequently, respondent's valuation is sustained.
See Lillis v. Commissioner, T.C. Memo. 1983-142, affd. without
published opinion 740 F.2d 974 (9th Cir. 1984) (taxpayers failed
to carry their burden of proof as to amount claimed for
depreciation where no evidence was introduced to establish basis
or other component of their depreciation formula); see also Boggs
v. Commissioner, T.C. Memo. 1981-224 (the Commissioner's estimate
of salvage value based on the NADA guide was sustained where the
taxpayer failed to introduce evidence to refute it).
(3) Wyoming Locksmith Shop
Petitioner claimed depreciation of $3,300 for the Wyoming
locksmith shop. Respondent does not challenge petitioner's
entitlement to depreciation. Rather, the parties disagree as to
the amount of depreciation to be allowed. Petitioner placed the
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