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Petitioners presented no evidence and cited no authority
supporting their claim of a deduction for the entire cost of the
automobile in the year of purchase. It is elementary tax law
that an expenditure that results in the acquisition of property
with a useful life extending beyond the year of purchase is
generally a capital expenditure, and the recovery of such
expenditure is an allowance for depreciation under section 167
over the useful life or recovery period of the asset. Section
167(a) provides generally that there shall be allowed as a
depreciation deduction a reasonable allowance for the exhaustion,
and wear and tear (including a reasonable allowance for
obsolescence) of property used in a trade or business or property
held for the production of income. It is patently clear,
therefore, that petitioners could not, during 1992, claim the
entire cost of the automobile as an ordinary and necessary
business expense. If petitioners are entitled to any deduction
at all for the automobile, it would be depreciation, and the
Court next considers that question.
For years after 1985, a deduction for transportation
expenses (which includes depreciation) is allowed only if the
taxpayer meets the strict substantiation requirements of section
274(d). Sec. 274(d)(1); sec. 1.274-5T(a)(1), Temporary Income
Tax Regs., 50 Fed. Reg. 46014 (Nov. 6, 1985). Section 274(d),
for taxable years beginning after December 31, 1985, was amended
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