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assets. Sec. 165(b). Respondent contends that petitioner has
failed to establish an adjusted basis other than zero for any of
the purportedly abandoned assets. The only documentary evidence
petitioner provided to establish the amount of the claimed loss
deduction for abandonment of tangible assets is the equipment
schedule. The equipment schedule lists the cost, but not the
adjusted basis, of each asset.
Respondent argues that several of the assets listed as
abandoned on the equipment schedule were fully depreciated prior
to 1995, and, therefore, had an adjusted basis of zero in 1995.
For example, the equipment schedule lists as abandoned a
televideo system with a cost in the amount of $25,700. A
depreciation schedule attached to petitioner’s 1994 Federal
corporation income tax return indicates that a televideo system
with a cost of $25,700 was fully depreciated before 1994.
Consequently, in 1995, this asset had an adjusted basis of zero.
Petitioner offered no explanation for why it should be allowed to
deduct the stated cost, rather than the adjusted basis, of any
purportedly abandoned asset. We agree with respondent that
petitioner has failed to establish an adjusted basis other than
zero for any of the purportedly abandoned assets.
Petitioner has not demonstrated that it sustained a
deductible loss pursuant to section 165(a) for the abandonment of
any tangible asset.
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