- 17 -
INDOPCO, Inc. v. Commissioner, supra at 87-88; United States v.
Miss. Chem. Corp., 405 U.S. 298, 310 (1972); FMR Corp. & Subs. v.
Commissioner, supra at 426; Conn. Mut. Life Ins. Co. v.
Commissioner, 106 T.C. 445, 453 (1996).
The record reflects that the additional labor expenses
substantiated by petitioners were incurred in connection with the
construction of the Mach Buster airplane, an asset having a
useful life substantially beyond the years in which the
expenditures were incurred. Therefore, the Court holds that the
aforementioned additional labor expenses substantiated by
petitioners, i.e., $11,624, $3,387, and $21,355 for 1995, 1996,
and 1997, respectively, are not currently deductible but, rather,
must be capitalized and eventually depreciated as a portion of
the cost of constructing the Mach Buster airplane.
Finally, petitioners contend that the Mach Buster airplane
was placed in service in 1997, and, thus, some depreciation
should be allowed for that year. Conversely, respondent contends
that the Mach Buster was placed in service no earlier than 1998,
and perhaps later, therefore, no depreciation for the airplane
should be allowed for any of the years at issue.
Section 167(a) allows taxpayers a depreciation deduction for
the exhaustion and wear and tear of property used in a trade or
business or held for the production of income. Property becomes
depreciable beginning when it is "placed in service". Piggly
Wiggly S., Inc., v. Commissioner, 84 T.C. 739, 745 (1985), affd.
Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 NextLast modified: May 25, 2011