- 13 -
trade or business within the meaning of section 167(a)(1). See
Steen v. Commissioner, 508 F.2d 268, 270 (5th Cir. 1975), affg.
61 T.C. 298 (1973). Nor have petitioners asserted or
established that they otherwise held the manufacturing equipment
for the production of income within the meaning of section
167(a)(2). Cf. Yanow v. Commissioner, 44 T.C. 444, 450-451
(1965), affd. 358 F.2d 743 (3d Cir. 1966).
Even if we were to assume arguendo that petitioners were in
the trade or business of manufacturing vending machines during
the years at issue, they have failed to substantiate their
entitlement to the depreciation or other business deductions
claimed. To substantiate entitlement to depreciation
deductions, petitioners must establish, among other things, the
property’s depreciable basis. See Delsanter v. Commissioner, 28
T.C. 845, 863 (1957), affd. in part and remanded on another
issue 267 F.2d 39 (6th Cir. 1959). Petitioners have failed to
do so. On their Federal income tax returns for the years in
issue, petitioners reported depreciable basis in the
manufacturing equipment that fluctuated erratically from year to
year.7 On brief, petitioners now claim smaller amounts of
7 For taxable year 1988, petitioners reported opening
adjusted basis of zero, an increase in basis during the year of
$45,000, and their amount at risk as $45,000. For taxable year
1989, petitioners reported opening adjusted basis of $614,000, a
decrease in basis of $505,631, and their amount at risk as
$108,639. For taxable year 1990–-the year in which NAC
(continued...)
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011