- 11 -
after December 31, 1986. See Hosp. Corp. of Am. v. Commissioner,
109 T.C. 21, 42 (1997). Accordingly, the key here is the date
when the property was placed in service. If it had been placed
in service before 1987, then petitioners would have been able to
elect the 10-year life.6 The property was rented during 1991,
1992, and 1993. In that regard, petitioner testified that the
property was placed in service in 1991, the first year it was
rented. On the basis of record, we find that the property was
placed in service in 1991, the first year that it was rented.
Accordingly, the 10-year life cannot apply, and the depreciation
must be based on a 27.5-year life. We leave the parties to
compute the amount of depreciation allowable for the 1996 tax
year.
III. Accuracy-Related Penalty
OPINION7
Respondent determined that petitioners were liable for an
accuracy-related penalty under section 6662 with respect to the
portion of the deficiency that is caused by any underpayment
related to the $39,274 legal and professional fee deduction and
6 We note that the returns available in our record date
back only as far as 1991. If petitioners had placed the
property in service before 1987 using a 10-year life, there
would have been no basis left to depreciate as of the 1996
tax year.
7 No specific finding is set forth here because the findings
of fact set forth with respect to the legal and professional fees
will suffice.
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