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petitioner's labor was contributed, and no wage or fee was paid
to petitioner for his labor on the timber farm).
Petitioners' total $147,643 cost for purchase and
improvement of the mobile unit was capitalized, and depreciation
thereon was claimed by petitioners as an expense of the timber
farm.
The primary difference between petitioners’ original Federal
income tax returns and petitioners’ proposed revised Federal
income tax returns, all of which were prepared by accountants and
experienced tax return preparers, relates to the Lear jet. On
petitioners’ original Federal income tax returns, the Lear jet
was treated as a separate trade or business activity, and all
noncapital costs thereof were treated as current business
expenses, including depreciation. On the proposed revised
returns, the Lear jet is not treated as a separate business
activity. Rather, based on the Lear jet’s flight logs, the
noncapital costs of the Lear jet (including depreciation) are
allocated to the various separate other activities of petitioners
and treated as deductible section 162 business expenses,
deductible section 212 expenses, or as nondeductible personal
expenses depending on the business, investment, or personal
nature of the underlying activity to which the expenses are
allocated.
On petitioners’ proposed revised Federal income tax returns,
petitioners treat their Tahiti Property as a for-profit
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