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certain other improvements in and around the home, including a
12- by 24-foot deck, a concrete perimeter, a storage area,
electrical wiring, a water system, a boathouse, a deck, and an
electric lift. The cost of the improvements was $3,000.
Because petitioners were stationed overseas until 1986, they
used the home only occasionally for vacations during their
infrequent visits to the United States. Petitioner had a heart
attack during 1986, and there was no further vacation use after
1985. When petitioner retired, petitioners purchased a residence
in League City, Texas. On their 1991 through 1996 tax returns,
petitioners reported the home as a rental property and reflected
income and deductions on Schedules E, Supplemental Income and
Loss. For each year depreciation approximating $3,9004 was
claimed on the Schedule E in connection with the home. Gross
rents were reflected for 1991, 1993, and 1994 in the amounts of
$1,782, $4,200, and $350, respectively, and no rents were
reported for the years 1995 through 1998. The property was first
rented in 1991 when its value was $39,000.
OPINION
Respondent determined that petitioners were not entitled to
$3,900 of depreciation on the home for 1996. Petitioners’
Schedule E for 1996 reflected a $7,305 loss from rental of the
4 For reasons which are not explained in the record,
petitioners claimed $3,900 in some years and $3,910 in others.
For the 1996 tax year, however, petitioners claimed $3,900.
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