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accordance with the provisions of that section.5 For the years
1984 and 1985, respondent disallowed all of the expenses claimed
for lack of substantiation. Unlike 1983, respondent did not
allow any expenses pursuant to section 183 for the years 1984 and
1985. Due to respondent's characterization of petitioners'
charter boat service, all investment tax credits claimed relating
to that activity were disallowed.
Cheryl Hammann's Condominium
Prior to her marriage to Hans Hammann, Cheryl Hammann
purchased a condominium in Augsberg, Germany. She paid 102,000
German deutschemarks for the property. Petitioners converted the
purchase price to dollars using a conversion rate of 1.56
deutschemarks to the dollar, resulting in a cost basis of
$65,545. In computing the depreciation deduction for each year,
they allocated 20 percent of the cost to land and 80 percent of
the cost to the building. They used the 125-percent declining-
balance method to compute their annual depreciation deduction
based upon a 20-year useful life. The condominium was rented to
unidentified tenants during the years 1983, 1984, and 1985.
After taking into account depreciation deductions claimed in
previous years the following depreciation deductions were claimed
on petitioners' returns with respect to this condominium:
5Consistent with respondent's determination, the allowed
expenses were taken into account in respondent's adjustment to
petitioners' itemized deductions.
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