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applicable convention is the midmonth convention.
Petitioner claimed a depreciation deduction of $1,737 for
the rental property for each year in issue computed as follows:
Month and Year Recovery
Placed in Service Basis Period Convention Method Deduction
11/89 $47,764 27.5 years M/M S/L $1,737
Petitioner’s computations are correct and comport with the
statute. However, petitioner used the purchase price of $47,764,
as his basis for depreciation purposes, which price includes both
land and building. The allowance for depreciation in the case of
tangible property does not apply to land. Sec. 1.167(a)-2,
Income Tax Regs.
Petitioner is entitled to a depreciation deduction for each
year. Upon the basis of the record, we find the value of the
land to be $10,000, leaving petitioner with an adjusted basis for
depreciation of $37,764. Thus, under section 168 petitioner is
entitled to a depreciation deduction of $1,373 for each taxable
year in issue.
Reviewed and adopted as the report of the Small Tax Case
Division.
Decision will be entered
under Rule 155.
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Last modified: May 25, 2011