Marvin L. Barmes and Barbara J. Barmes - Page 7




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            of the business use of the two automobiles for 1994.                                       
                  Petitioners deducted expenses of $27,187 on the 1994                                 
            Schedule C they filed for Barbara’s Gift Shop for restoring and                            
            improving their pond.  These expenses did not relate to Barbara’s                          
            Gift Shop.                                                                                 
                  3.    Petitioners’ Schedule F                                                        
                  Petitioners reported on a Schedule F, Profit or Loss From                            
            Farming, attached to their 1994 return that they had gross income                          
            from their cattle activity of $1,593, total expenses of $3,043,                            
            and a net operating loss of $1,450.                                                        
            F.    Notice of Deficiency                                                                 
                  Respondent determined that petitioners were not entitled to                          
            deduct the depreciation on the Cadillac and the Corvette.                                  
            Respondent also disallowed petitioners’ deduction of expenses                              
            relating to the pond.                                                                      
                                               OPINION                                                 
            A.    Whether Petitioners May Deduct Depreciation for the Cadillac                         
                  and the Corvette                                                                     
                  For petitioners to be entitled to deduct depreciation on                             
            their automobiles for 1994, they must prove the amount of                                  
            business use of each automobile.  See secs. 280F(b)(3),                                    
            168(g)(2).  Petitioners must substantiate the business use of                              
            their automobiles by adequate records or other evidence                                    
            corroborating their own statement of the amount, time and place,                           
            and business purpose of the automobile use.  See sec. 274(d)(4).                           





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