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the active conduct of a trade or business. In 1997, the
aggregate deduction limit of elected property under section
179(a) was $18,000. If a property has both business and other
uses, then the taxpayer must establish that more than half of the
property’s use in the taxable year is for trade or business
purposes. See secs. 274(d), 280F(d)(4); sec. 1.179-1(d)(1),
Income Tax Regs.
Petitioner failed to establish that the Mustang was
predominantly used in his trade or business as an employee of
IBC. Petitioner did not establish either the total use or the
business use of the vehicle. The incomplete mileage log,
petitioner’s testimony, and the inconsistent statements from
petitioner’s 1997 Federal income tax return prevent us from
determining the amount of business use, if any, of the Mustang.
Therefore, we sustain respondent’s determination as to this
issue.
C. Depreciation
Petitioner deducted $2,952 and $3,621 in 1996 and 1997,
respectively, for depreciation of the Dodge van and Ford Mustang.
Section 167(a) permits a depreciation deduction for the
exhaustion and wear and tear of property used in the trade or
business. Section 274(d) imposes a strict substantiation
requirement for deductions with respect to any listed property.
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Last modified: May 25, 2011