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Depreciation Deductions
A house is located on petitioner’s property. The
Maschmeyers moved into this house in 1977 to replace the previous
tenant, who had lived there since about 1965 while employed as
petitioner’s foreman. Maschmeyer continued to occupy the house
throughout the years at issue. For the convenience of his wife
and children, however, in 1989 he purchased a home in
Indianapolis, where his wife and children lived during the week.
Maschmeyer assumed the foreman’s duties, securing the premises
and equipment, overseeing the gang of migrant workers housed in
mobile homes on the premises, and supervising pickup of trees
outside business hours during harvest seasons.
After Maschmeyer became sole shareholder, petitioner made
certain improvements to the house that Maschmeyer occupied. In
1986 a swimming pool was installed at a cost of $35,011. In 1987
a pool house and other amenities were added to the house at a
cost of $32,684. In 1988 and 1989 improvements were made to the
garage and a master bedroom was added to the house at a cost of
$94,295. Additional redecorating and wallpapering were done at a
cost of $4,482 in 1990. Petitioner claimed depreciation
deductions for the aforesaid improvements in 1989, 1990, and 1991
in the amounts of $4,212, $5,038, and $5,038, respectively.
Respondent disallowed these deductions in her notice of
deficiency.
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