G. Dastgir and Mary A. Qureshi - Page 11

          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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