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$4,038.92 during 1988 for materials used in that construction.
In January 1989, approximately one-half of the Building was
placed in service as a car wash known as Sand M Auto Cleaning
Service (car wash business). During 1993, petitioners had no
employees and operated their car wash business themselves.
Petitioners first claimed a depreciation deduction with
respect to the Building in their 1989 return. They determined
the depreciation deductions claimed in that and subsequent
returns, including their returns for the years at issue, on the
basis of a claimed original cost basis in the Building of
$55,000. That claimed basis represented the fair market value of
the Building, including the cost of the materials and petition-
ers’ labor, as estimated in 1989 by petitioners and a friend.
During 1994, petitioners expended $3,074 to purchase and
install two doors and four pieces of glass into 64- by 96-inch
openings in the portion of the Building that they were not using
as a car wash (unfinished portion of the Building). During 1995,
petitioners spent $2,918 on additional construction with respect
to the unfinished portion of the Building. The unfinished
portion of the Building was not finished during the years at
issue. As of the date of the trial, that portion of the Building
was still under construction and had never been used or rented.
Petitioners intend to finish the unused portion of the Building
when they have enough money to do so. When that portion of the
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Last modified: May 25, 2011