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on the date it disappeared. Upon examination, respondent
disallowed the claimed deductions, asserting that petitioners had
presented no evidence regarding their cost basis in either Since
Gussie or the puppy.
(b) Amortization of Startup Expenditures for 1991 and 1992
Prior to commencing operation of Arabian Hill in 1988,
petitioners acquired horses and related assets during the years
1982 through 1987. Petitioners estimate that they incurred
startup expenditures related to Arabian Hill in the amount of
$20,370. Petitioners itemize their claimed startup expenditures
as follows:
Research--assessing viability $1,680
Asset search 3,130
Seminars, clinics, and other events 3,060
Tack and supplies 10,000
Other developmental expenditures 2,500
Total 20,370
Petitioners assert that they are entitled to amortize these
expenditures as start-up expenditures, beginning with the taxable
year 1988 and continuing for the following 4 years. Accordingly,
on each of their 1991 and 1992 returns, petitioners claimed an
amortization expense deduction in the amount of $4,074,
attributable to these purported expenditures. Upon examination,
respondent disallowed petitioners' claims for amortization
deductions, asserting that petitioners had failed to make a
timely election to amortize the startup expenditures under
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