- 21 -
that, even as of the date of this trial, the museum doors had not
yet been opened to the public. Petitioners have not carried
their burden of proving that they are entitled to deduct the
claimed expenses under section 162(a).10 We, therefore, sustain
respondent's determination on this issue.
Issue Three: Income From Blumenstock Enterprises, Ltd.
To resolve the next issue, we must determine Mr. Garrett's
ownership percentage in BEL during 1991. Respondent disallowed
certain expenses claimed by BEL in 1991, thus increasing
petitioners' ordinary income by $34,895. After inspecting
canceled checks, paid invoices, and adjusting journal entries of
BEL, respondent submitted lists of these specific items to BEL's
corporate representative who confirmed that these items
represented nonbusiness, personal expenditures. Petitioners
acknowledge that the expenses were not allowable deductions of
10Petitioners contend that if they cannot deduct all the
muscle car expenditures during the years in issue, then they
should be allowed to depreciate the muscle cars under sec. 167.
Depreciation is not allowed on assets acquired for a business
that has not begun operations. Piggly Wiggly Southern, Inc. v.
Commissioner, 84 T.C. 739, 745-746 (1985), affd. on other issues
803 F.2d 1572 (11th Cir. 1986). Petitioners themselves have not
treated the muscle car collection as a depreciable asset. They
have never taken a depreciation deduction expense for the muscle
cars on their individual Federal income tax returns. In light of
our finding that petitioners' operations did not function as a
going concern, we conclude that they are not entitled to any
depreciation expense under sec. 167. In addition, petitioners
have failed to provide any substantiation of their alleged basis
in the specific cars they wish to depreciate.
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