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Issue 2. 1984 Depreciation, Investment Tax Credit, and Loss Arising
From FoodSource Investment
In order to establish petitioners’ entitlement to an
investment tax credit and depreciation deduction for 1984,
petitioners must establish that: (1) The container was placed in
service during the taxable year; (2) petitioner had a profit
objective in acquiring and holding the property; and (3) petitioner
had a particular basis in the property for tax purposes. In order
to establish petitioners’ 1984 FoodSource loss, petitioners must
prove that it was a loss connected with a transaction entered into
for profit.
a. Placed in Service
Depreciation begins, and the investment tax credit is allowed,
in the year in which a taxpayer places the qualifying property in
service. Secs. 38(a), 46(a)(1) and (2), 46(c); secs. 1.46-3(a)(1),
1.167(a)-10(b), 1.167(a)-11(e)(1)(i), Income Tax Regs. Property is
placed in service when it is “placed in a condition or state of
readiness and availability for a specifically assigned function,
whether in a trade or business, in the production of income, in a
tax-exempt activity, or in a personal activity.” Secs. 1.46-
3(d)(1)(ii), 1.167(a)-11(e)(1)(i), Income Tax Regs.
Here, paragraph (1) of the closing agreement states that
petitioner’s container was placed in service on December 5, 1983.
No evidence to the contrary was presented. Accordingly,
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