Gary G. and Linda J. Hart - Page 7

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          Barn using the midquarter convention, the 150-percent declining              
          balance method, and a 10-year recovery period.  In the notice of             
          deficiency, respondent determined that the $16,730 cost consisted            
          of the cost of two separate assets: (1) The Tobacco Barn, and (2)            
          a concrete septic tank.3  Respondent determined that the Tobacco             
          Barn was not entitled to section 179 treatment and that the                  
          applicable recovery for the Tobacco Barn is 20 years.                        
          Issue 1.  Deduction Under Section 179                                        
               Section 179(a) allows a taxpayer to deduct, rather than                 
          capitalize, the cost of certain property up to specified dollar              
          limits as specified in section 179(b).  The deduction is                     
          allowable for the entire cost or a portion of the cost of the                
          property.  See sec. 1.179-1(b), Income Tax Regs.  As pertinent               
          here, section 179 property is any tangible property that is                  
          section 1245 property as defined in section 1245(a)(3).  See sec.            
          179(d)(1).  Section 1245 property is defined, by section                     
          1245(a)(3) as, inter alia:                                                   
                    (A) personal property,                                             
                    (B) other property (not including a building or its                
               structural components) but only if such other property is               
               tangible and * * *                                                      

          3  As previously mentioned, petitioners have conceded the                    
          adjustment regarding the concrete septic tank.                               

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