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its 1996 taxable year equaled $659,827, that it had applied that
NOL only to its 1993 and 1994 taxable years, and that the NOL was
available in part for carryover to 1997 and later years.
On August 28, 2002, Tacker prepared for petitioner an
amended Federal income tax return for its 1997 taxable year. The
amended return conceded that petitioner did not have a $234,265
NOL to apply to that year and claimed, instead, that petitioner
was entitled to deduct a $246,382 abandonment loss. As stated on
the amended return: “THE COMPANY SCRAPPED VARIOUS EQUIPMENT USED
IN THE CALIFORNIA OPERATION AS OBSOLETE BASED UPON HIGH MILEAGE
AND EXCESSIVE USE. THE BASIS OF THE EQUIPMENT (VEHICLES) WAS
$246,382 BASED UPON COST MINUS DEPRECIATION.”
During this proceeding, Tacker prepared workpapers that were
admitted into evidence by stipulation as part of Exhibit 5-J.
These workpapers in relevant part list under the category “Assets
Abandoned/OBSOLETE” 79 assets the “Unrecovered Cost” (adjusted
basis) of which totals $246,382 as of May 31, 1995, and May 31,
1997.3 Exhibit 5-J also contains a computerized list of
approximately 318 depreciable assets owned by petitioner as of
May 31, 1995, and used by it in connection with the contract.
Of the 79 assets listed on the workpapers, 75 are also shown on
3 According to Tacker, the assets appearing on this
workpaper were useless to petitioner after May 31, 1995. Thus,
he did not compute any depreciation for these assets after that
date.
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