- 20 -
b. Utilities
Wolf Creek Farm deducted utilities expenses of $1,991 in
1995, $2,016 in 1996, and $2,081 in 1997. Utilities expenses may
be deductible under section 162(a) if the expenses incurred are
ordinary and necessary in carrying on a trade or business.
Vanicek v. Commissioner, 85 T.C. 731, 742 (1985); Sengpiehl v.
Commissioner, T.C. Memo. 1998-23; Green v. Commissioner, T.C.
Memo. 1989-599.
Here, the farm lease did not contain any provisions
regarding the utilities for the farmhouse. Petitioners did not
produce any utility bills, canceled checks, or testimony to
identify that, if any, portion of the utility expenses related to
the corporation’s business. We have no basis for making any
allocation of the expenses. Thus, petitioners have failed to
establish that Wolf Creek Farm is entitled to any deduction for
utilities expenses.
c. Depreciation
Wolf Creek Farm deducted $569 in 1995, $587 in 1996, and
$575 in 1997 for depreciation of the farmhouse. Section 167(a)
allows a depreciation deduction from gross income for property
used in the taxpayer’s trade or business or held for the
production of income. Ordinarily, depreciation or amortization
is available to an owner of an asset with respect to the owner’s
basis in the asset. Wolf Creek Farm owned the homestead,
Page: Previous 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 NextLast modified: May 25, 2011