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should be capitalized, and petitioners should be entitled to a
recovery for depreciation under section 167. Section 167
provides, in part, for the allowance of a depreciation deduction
with respect to "property used in the trade or business". The
Court disagrees with respondent's factual premise. The engine
was acquired by petitioner in March 1991, and the record supports
a finding that the research and experimentation was a trade or
business of petitioner and was conducted during 1991. The
engine, therefore, was placed in service during 1991.
Petitioners, therefore, are entitled to a depreciation deduction
for the cost of the engine for 1991.
Decision will be entered
under Rule 155.
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Last modified: May 25, 2011