- 9 -
referred to as MACRS) as 7-year property, using the 200-percent
declining balance method and the midquarter convention.)4
The remaining $111,195 ($127,067 less $15,872) of
expenditures that petitioners paid for construction work on the
Store Space was for the (1) excavation of the site, (2)
installation of a concrete floor slab and floor coverings
therefor, (3) installation of electrical service and fixtures,
(4) installation of plumbing service and fixtures, (5)
construction, painting, and wallpapering of permanent walls and
partitions, and (6) installation of windows and doors. All of
the $111,195 of expenditures that petitioners paid were for the
performance of the Improvements as set forth in the Lease.
Of the remaining $111,195, $18,739 were payments made in
lieu of the monthly payments due under the Lease for the 6-month
period December 1995 through May 1996. See supra A. Lease,
listing of 6-month delay items. The parties disagree as to the
4 In 1995, petitioners bought $42,855 of equipment for the
Bakery, in addition to the $15,872 discussed in the text. Some
part of this $42,855 is in addition to the amounts dealt with in
petitioners’ 1995 tax return and respondent’s notice of
deficiency.
As we interpret the parties’ stipulation, any part of the
$42,855 that petitioners are not allowed to expense under sec.
179(a) (subject to the limitations of sec. 179(b)), discussed
infra under II. Section 179 Election, shall be capitalized and
depreciated under MACRS as 7-year property, using the 200-percent
declining balance method and the midquarter convention.
As a result, a Rule 155 computation will be required
regardless of how we rule on the issues for decision.
Unless indicated otherwise, all Rule references are to the
Tax Court Rules of Practice and Procedure.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011