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depreciation and other deductions claimed by a partnership, it is
incumbent on petitioners to substantiate and establish the
partnership's entitlement to those deductions under the terms of
the applicable statutes permitting those deductions. See New
Colonial Ice Co. v. Helvering, 292 U.S. 435 (1934); Karme v.
Commissioner, 673 F.2d 1062, 1065 (9th Cir. 1982), affg. 73 T.C.
1163 (1980).
Issue 1. Depreciation Deductions
Section 167 generally allows as a depreciation deduction a
reasonable allowance for the exhaustion, wear and tear of
property used in business or of property held for the production
of income. The person who bears the economic loss of invested
capital resulting from the exhaustion, wear and tear of business
property or property held for production of income is the one
entitled to the depreciation deduction. See Helvering v. F. & R.
Lazarus & Co., 308 U.S. 252, 254 (1939).
In the instant cases, petitioners and respondent recognize
that for RCR #4, RCR #6, and OGT 90 to be entitled to their
claimed depreciation and certain other deductions, each
partnership must be the owner for tax purposes of the specific
numbers of breeding sheep that it allegedly purchased and placed
in service. Respondent raises no contention that each
partnership was in an activity not engaged in for profit.
Although respondent has not asserted that each partnership's
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