- 11 - 280F, which limits the deduction of luxury automobiles, they are entitled to a $1,417 deduction relating to 1994. Petitioners bought the Rolls Royce for $27,000 in 1984 and placed it in service that year. Once placed in service depreciation continues until the cost basis of the property has been either recovered through previously allowed or allowable depreciation deductions or the property is retired from service (i.e., sold, abandoned, or destroyed). Sec. 1.167(a)-10, Income Tax Regs.; Rev. Proc. 87-57, sec. 2.05, 1987-2 C.B. 687, 688. Petitioners’ automobile was not retired from service prior to the years in issue. Thus, pursuant to section 280F(a), the automobile would have been fully depreciated well before petitioners filed their 1994 return, on which they deducted the $1,475. Sec. 280F(a)(2)(B)(iv); sec. 1.167(a)-10(a), Income Tax Regs. Accordingly, their deduction is disallowed. Because petitioner is an employee of Western, we also hold that the $39,000 expense is deductible as a miscellaneous itemized deduction. Sec. 67(a). VI. Penalties Section 6662(a) imposes a 20-percent accuracy-related penalty on the portion of an underpayment of tax which is attributable to a taxpayer’s negligence or disregard of rules or regulations. Sec. 6662(b)(1). Section 6664(c)(1) provides that no penalty shall be imposed if it is shown that there wasPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 Next
Last modified: May 25, 2011