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gain is not subject to the section 1221 capital gain preference
as a result of the application of section 1221(2), petitioner’s
gain does receive preferential treatment under section 1231. But
see sec. 1250.
As a final matter, petitioner claims that he received the
sales proceeds on account of the Longport property and certain
personal property, such as appliances purchased for the rental
unit. We find petitioner’s claim credible. We therefore
allocate $1,000 of the sales proceeds to the sale of a
refrigerator and washer/dryer and conclude that the following
amounts (which petitioner has substantiated) should constitute
the adjusted basis of the personal property:
Personal Property Date of Purchase Amount
Refrigerator Nov. 7, 1985 $1,010.69
Washer/Dryer May 18, 1993 881.02
Petitioner, however, must reduce the adjusted basis of this
property as well for depreciation allowed or allowable. See
secs. 1231 and 1245 with regard to the characterization of the
gain or loss.
B. Operating Expenditures
Deductions are a matter of legislative grace, and petitioner
bears the burden of proving that he is entitled to the deductions
4(...continued)
property should be allocated solely to petitioner.
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