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approximately $2,900. After its incorporation, NII paid $167,186
to build the Addition.
Petitioner placed both the Burke Building and the Addition
(the Burke Property) in service on January 1, 1972, the date that
Burke took possession of the Addition. For the Burke Building,
NII has always used the straightline method of depreciation in
conjunction with a useful life of 28-1/2 years. For the
Addition, it has used the 125-percent declining balance method
with a useful life of 30 years.
Within a month after paying for the Addition, on January 31,
1972, petitioner borrowed an additional $202,918.92 against the
Burke Property from TIAA. Petitioner consolidated this loan and
the previous loan from TIAA into one $500,000 loan (the TIAA
Loan). Starting on March 1, 1972, the consolidated note required
monthly payments of interest and principal of $4,238.87. The
interest rate on the consolidated loan was 9-1/8 percent per
annum.
The Burke Property also secured other loans in later years.
For example, the property secured a $75,000 loan from a group of
investors (Investor Group Loan) from June 10, 1982, until October
29, 1985. On September 27, 1985, Owens Financial Group, Inc.,
lent petitioner $85,000 (Owens Loan). The Owens Loan was
collateralized by the Burke Property. Petitioner repaid the
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