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Building is finished, petitioners plan to use it as a store in
which to sell automobile products.
Petitioners deducted the amounts that they spent during 1994
and 1995 on the unfinished portion of the Building as “Repairs
and maintenance” in Schedules C of their 1994 and 1995 returns.
During 1993, petitioner Shirley A. White was employed by C&P
Telephone West Virginia and received an annual salary of
$29,370.41. During that year, petitioner Meredith White was
employed by the City of Montgomery, West Virginia, and received
an annual salary of $18,478.93.
In the notice, respondent determined, inter alia, that
petitioners’ cost basis in the Building was $27,849 and that, for
purposes of calculating the depreciation deductions to which
petitioners are entitled for the years at issue, that basis must
be divided in half. That is because, according to respondent,
petitioners used only approximately one-half of the Building to
conduct their car wash business. Respondent also determined in
the notice that the $3,074 and $2,918 claimed as “Repairs and
maintenance” in Schedules C of petitioners’ returns for 1994 and
1995, respectively, are not deductible for those years but must
be included as part of their basis in the unfinished portion of
the Building that was under construction during those years.
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Last modified: May 25, 2011