Gerald L. and Joy M. Zeidler - Page 18

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          Petitioners claimed straight-line depreciation deductions on this           
          property (the Sister Bay property) of $1,920 for each of the                
          years 1990 and 1991.  In the notices of deficiency, respondent              
          disallowed the entire amounts claimed for the reason that                   
          petitioners had not established their cost or basis for the                 
               Petitioners acquired the Sister Bay property in two stages--           
          an undivided one-half interest in 1988 and the other one-half               
          interest in 1989.  They submitted in evidence two quitclaim deeds           
          to substantiate their acquisition of these undivided interests.             
          The deeds, however, make no recitation of the consideration paid            
          for the property.  The property was acquired from Mrs. Zeidler's            
          parents, and petitioners contend they paid $70,400 for the                  
          property.  Petitioners calculated their depreciation for 1990 and           
          1991 based on $52,800 as the cost of the house and improvements,            
          with a useful life of 27.5 years.                                           
               Petitioners contend the $70,400 cost of the property was               
          paid by them, as follows:                                                   

          $18,400 in satisfaction of a prior loan by Mrs. Zeidler to her parents      
          40,000 in cash that petitioners received over a period of 2 years as gifts  
          from Mr. Zeidler's parents                                                  
          8,000 approximately the amount petitioners paid in cash from their own      
          4,000 approximately an amount owing by Mrs. Zeidler's parents to            
          petitioners for work Mr. Zeidler performed on the retirement                
                     home of Mrs. Zeidler's parents in North Carolina                 
          $70,400 TOTAL                                                               

               This is the issue referred to in supra note 5.                         

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