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establish that Dreyer Farms is entitled to any deduction for
utilities or telephone expenses.
d. Depreciation
Dreyer Farms deducted $2,357 in 1995, $3,219 in 1996, and
$3,326 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. Dreyer Farms owned the Weeldreyer farm,
including the farmhouse. One of the business activities of
Dreyer Farms was the leasing of the Weeldreyer farm, including
the farmhouse. Thus, the farmhouse is property used in the
corporation’s trade or business.
We hold that Dreyer Farms is entitled to a deduction for
depreciation of the farmhouse for each of the years at issue as
claimed.
e. Taxes
Dreyer Farms deducted property taxes of $1,283 in 1995,
$1,567 in 1996, and $1,401 in 1997 attributable to the farmhouse.
Dreyer Farms owned the Weeldreyer farm. Section 164(a)(1) allows
the owner of property a deduction for real property taxes. We
hold, therefore, that Dreyer Farms may deduct property taxes as
claimed in the years at issue.
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