- 56 -
in a trade or business. Section 167(c)(1) provides that the
basis on which the exhaustion, wear and tear is allowed is the
adjusted basis determined under section 1011. Thus, to be
entitled to a depreciation deduction, petitioners must establish
their adjusted bases in the properties with respect to which they
are claiming depreciation deductions for the years at issue.
Prior to the trial herein, the parties stipulated that
petitioners are entitled to depreciation deductions for the years
at issue that are based on adjusted bases of a minimum of $22,102
with respect to properties placed in service during 1986. Peti-
tioners argue that their bases in the properties placed in serv-
ice during 1986 was greater than the amount of $22,102 to which
the parties stipulated.43 The only evidence in the record re-
garding petitioners' claim is the testimony of Mr. Katerelos on
which we are unwilling to rely.44
Although petitioners admitted that they do not have re-
ceipts to support their claim that they had bases in properties
43 It is unclear whether petitioners are arguing that they
placed properties into service during 1986 in addition to those
properties that the parties stipulated had minimum bases of
$22,102 or that their bases in the latter properties exceeded
$22,102.
44 Petitioners attempted to call Mr. Fisher to testify as an
expert witness on their behalf for purposes of valuing the
properties used at NDV. As required by Rule 143(f), petitioners
submitted a purported expert report prepared by Mr. Fisher before
trial. Respondent filed a motion to exclude that report and any
expert testimony by Mr. Fisher. The Court granted respondent's
motion and did not admit the purported expert report of Mr.
Fisher into evidence and did not allow him to testify as an
expert witness.
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