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his testimony does not establish that there was any actual
agreement to transfer the equipment before the summer of 1988,
when Pacer transferred the equipment to Venco.4
On brief, petitioners argue that even if petitioner did not
acquire title to the manufacturing equipment until September
1988, he should be viewed as acquiring beneficial or
constructive ownership of the equipment in the fall of 1987.
The facts indicate otherwise. Petitioners’ Federal income tax
returns state that the manufacturing equipment depreciated on
those returns was acquired by petitioners on July 1, 1988.5 The
record does not show that petitioner assumed any economic
obligations with regard to the equipment in the fall of 1987.
Nor does the record credibly establish that petitioner’s
involvement with the equipment before September 1988 was other
than in his capacity as shareholder and manager of Pacer, which
4 The testimony of Stan Rowe and the affidavit of John Ford,
upon which petitioners also rely, merely indicate that work
occurred on the Ford order in late 1987 and early 1988, and do
not establish that petitioner owned the manufacturing equipment
at those times.
5 On brief, petitioners suggest that they reported acquiring
the equipment on July 1, 1988, because they were using the half-
year convention provided under sec. 1.167(a)-11(c)(2)(iii),
Income Tax Regs. Petitioners’ explanation, however, is
inconsistent with their argument that they acquired the equipment
in 1987.
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