- 2 - (1) Whether petitioners are entitled, under section 174(a), to a deduction for the cost of an automobile engine that was used in connection with a research or experimentation activity of Leonard Charles Ekman (petitioner); (2) if the automobile engine is not deductible as a research or experimentation expense, whether the cost is deductible under section 179; and (3) if the cost of the automobile engine is not deductible under either section 174(a) or section 179, whether the engine is depreciable under section 167. Some of the facts were stipulated. Those facts, with the annexed exhibits, are so found and are incorporated herein by reference. At the time the petition was filed, petitioners, husband and wife, were legal residents of Panama City, Florida. Although the issues in this case involve one item, an automobile engine that was used in a research and experimental activity, there are several other adjustments in the notice of deficiency as to which the parties reached a basis for settlement prior to trial.2 2 On their income tax return, petitioners claimed Schedule A itemized deductions of $11,819. In the notice of deficiency, respondent disallowed these expenses as itemized deductions but allowed Schedule E expenses on rental property of $12,725 and $1,790 for depreciation. Petitioners agree to these adjustments. On Schedule C of their income tax return, relating to petitioners' research or experimental activity, petitioners claimed expenses totaling $18,305 that respondent totally disallowed. Respondent, however, allowed a deduction, under Schedule C, in the amount of $609, for expenses petitioners had (continued...)Page: Previous 1 2 3 4 5 6 7 8 9 10 11 Next
Last modified: May 25, 2011