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(8th Cir. 1985). Depreciation is not allowed on an asset
acquired for a business that has not yet begun operations.
Piggly Wiggly S., Inc. v. Commissioner, supra at 745.
A. 5401-9 S. Broadway Property Depreciation Expenses
The 5401-9 S. Broadway property building has a total floor
area of approximately 27,000 square feet, or 13,500 square feet
per floor. For 1992 and 1993, petitioners’ accountant calculated
depreciation deductions with respect to the entire building. The
parties, however, have stipulated for purposes of this case that,
from 1990 through 1993, the second floor of the building was
still under construction and that no business or rental activity
was conducted there during 1992 and 1993.
Although petitioners contend that the entire first floor at
one time had been held out by petitioner for rent, by the end of
1990, petitioner had decided to convert and use a space of
approximately 6,000 square foot as a Bluesroom. Neither the
Bluesroom nor the 5-4 Ballroom was used by petitioners in a
Schedule C trade or business or in a Schedule E rental activity
during 1992 or 1993.
Respondent concedes that 25 percent of the building was used
for rental purposes during 1991, 1992, and 1993. We consider
respondent’s estimate of the portion of the building petitioner
used for rental purposes to be reasonable. Together, the 5-4
Ballroom and the Bluesroom (which petitioner had removed from
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