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Casualty Loss and Depreciation Deductions
Petitioner owned real property at 10 Balligomingo Road, West
Conshohocken, Pennsylvania (Property). The Property consisted of
6.836 acres with improvements, including three buildings, which
were referred to at trial as the north building (7,839 square
feet), the finger building (2,959 square feet), and the south
building (9,324 square feet). The majority of the land was
unimproved, and consisted of a creek and adjoining flood plain
and steep slopes. In addition, the neighboring landowner held
access and maintenance easements over the Property.
The south building consisted of three sections that we shall
refer to as the western section, the middle section, and the
eastern section. The three sections were separated by walls.
During the year in issue, petitioner leased the south building to
Julicher Sports and to other acquaintances and business
associates, as a warehouse. On both his 1993 and 1994 Federal
income tax returns, petitioner reported rental income from the
foregoing leasing activities.
Petitioner acquired the Property, including land and
improvements, on April 14, 1988, for a purchase price of
$393,378.2 In order to finance the purchase, petitioner obtained
2 Petitioner’s wife at the time, Melanie Julicher, was also
a purchaser, but in 1991 she transferred her interest in the
Property to petitioner. For convenience, we shall refer to
(continued...)
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