Joseph A. Morcos and Joann M. Morcos - Page 5




                                        - 4 -                                         
          Federal income tax returns.  Depreciation expenses of $4,110 for            
          the carriage house and $26,164 for the third floor units in each            
          year contributed to net rental losses of $26,387 in 1996 and                
          $16,908 in 1997 which petitioners used to offset income from                
          wages and self employment.                                                  
               Petitioners allocate their purchase price for the property             
          between the land and improvements as follows:  (1) $25,000 to               
          land; (2) $21,000 to the carriage house; and (3) $79,000 to the             
          main house.  Petitioners allocate the following estimated                   
          expenses for renovations made to the property over a 15-year                
          period:                                                                     
               First floor areas, excluding kitchen         $30,000                   
               Second floor areas                           30,000                    
               Third floor areas                            40,000                    
               Kitchen and other utility areas              40,000                    
               Roofing and exterior                         75,000                    
               Driveway and parking areas                   15,000                    
               Pool and garden areas                        80,000                    
               Landscaping                                  40,000                    
               Third floor furniture and fixtures           25,000                    
               Common area furniture and fixtures           125,000                   
               Carriage house                                70,000                   
                    Total                                   570,000                   
               Petitioners calculated depreciation allowances with respect            
          to the third floor units by allocating a portion of their                   
          purchase price to the third floor and increasing their                      
          depreciable cost basis by the amount they incurred in renovating            
          the third floor.  Petitioners also claimed depreciation for a               
          percentage of the cost basis and renovation costs for the common            
          areas of the main house.                                                    





Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  Next

Last modified: May 25, 2011