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depreciation deductions included in the farm’s $481,577 reported
net tax loss.
Petitioner has not identified any nondeductible expenditures
made by the family farm during 1979-93, other than the purchases
of depreciable property referred to above.6 In addition,
petitioner asserts that at the time of decedent's death, the
value of the family farm did not exceed the value of the farm
land itself. Moreover, during the fiscal years ending from
February 1985 through February 1994, the family farm’s principal
activity was the rental of the family farm land; depreciation and
taxes accounted for almost all of the farm’s expenses during this
period.
The cost of all family farm expenditures made during 1979-93
is therefore accounted for in the $481,577 reported tax loss of
the family farm.
Approximately $171,500 of the $481,577 reported net loss
resulted from deductions claimed for the depreciation of farm
equipment (and other farm property) owned by Garry at the time of
his death. Because this property was not purchased by the family
farm, the farm did not make any cash expenditures during 1979-93
corresponding to the depreciation deductions claimed.
6 The farm did purchase a few cows and hogs after Garry’s
death, but it sold all its livestock in its fiscal year ended in
February 1984.
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