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Legal ownership is not a prerequisite to the right to a
depreciation deduction, but rather depreciation is predicated on
an investment in the property. See Helvering v. F. & R. Lazarus
& Co., 308 U.S. 252, 254 (1939); Blake v. Commissioner, 20 T.C.
721, 732 (1953). The evidence in the record reflects that
petitioner divested himself of ownership and an investment in the
rental equipment during the year in issue.
Respondent’s contention that Dr. West was the legal owner of
the rental equipment during 1993 is supported by the evidence.
An attorney representing petitioner in Aeternum’s affairs made
the following reference for May 1, 1993, in an invoice sent to
petitioner: “telephone conf. with * * * [petitioner] re
representing * * * [Dr. West] in action against landlord re
equipment sold to * * * [Dr. West] by * * * [petitioner]”. In an
separate invoice, a different attorney representing petitioner in
his bankruptcy and Aeternum affairs made the following reference
for the date of July 23, 1993: “conference with * * * [Dr. West’s
attorney] re: his comments and changes pursuant to list of
equipment for items sold”. Petitioner also made the following
representation in the Settlement Agreement with respect to the
equipment that Cilena rented to Aeternum under the equipment
lease:
[Petitioner] represents and warrants that he does not
own the Leased Equipment and that he assigned such
Leased Equipment to * * * [Dr. West]; as such, to the
best of * * * [petitioner’s] knowledge, * * * [Dr.
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