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depreciation was claimed or allowable before 1991. No evidence
contradicted petitioner’s testimony. Accordingly, there is
sufficient and credible evidence in the record to establish that
petitioners’ basis in the rental home was $39,000 as of 1991.
We find that the property was held for the production of
income during 1996 and that it was placed in service in 1991.
Our findings are supported by petitioner’s uncontroverted
testimony reflecting his intent to rent or sell the property
during 1996 and by the fact that it was rented during prior
years. Respondent argues that the rentals and income reported
from the property were received from a person related to
petitioners. That fact, standing alone, does not show that the
rental activity was not bona fide or that no profit was intended.
There has been no evidence of petitioners’ personal use after
1985. There has been no showing that the rentals were not at
arm’s length or that the amounts received were not based on fair
rental rates.
Finally, respondent argues that petitioners must use a 27.5-
year life in accord with MACRS. Respondent admits that
manufactured homes were treated under ACRS as having a 10-year
life. Sec. 168(h)(3) (before the Tax Reform Act of 1986 (TRA),
Pub. L. 99-514, 110 Stat. 2085). However, TRA sections 201, 203,
and 211, 100 Stat. 2122-2123, 2143, established a 27.5-year life
under MACRS for this type of property if it was placed in service
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