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cost of, and basis in, that simulator, see secs. 1011(a) and
1012, or (2) any other basis in that simulator, see sec. 1.1015-
1(a)(3), Income Tax Regs.
On the record before us, we find that, assuming arguendo
(1) that SDC transferred the computer simulator to TGC by gift,
(2) that any such gift is treated as a gift to petitioners for
purposes of determining petitioners’ entitlement for the taxable
years at issue to depreciation deductions with respect to that
simulator, and (3) that petitioners’ basis in the computer
simulator under section 1015(a) is SDC’s cost of, and thus its
basis in, that simulator, petitioners have failed to carry their
burden of establishing that they are entitled for the taxable
years at issue to the depreciation deductions that they are
claiming with respect to that simulator.
8(...continued)
that TGC expended as of September 1996 pursuant to the 1992
contract. The amounts detailed in the expenditure summary were
for categories such as “DIRECT LABOR” (e.g., costs for 4880
Senior Technologist man-hours, costs for 2475 Mathematician man-
hours) and “CONSULTANTS”. The expenditure summary did not show
how much of those amounts TGC expended for the design and con-
struction of the computer simulator and how much of those amounts
TGC expended to complete the other tasks that it was obligated to
perform under the 1992 contract. In addition, the expenditure
summary indicated that as of September 1996 TGC spent a total of
$9,925 on “MATERIALS”. The expenditure summary did not indicate
how much of that amount TGC expended on materials for the com-
puter simulator and how much TGC expended on materials that it
needed to complete the other tasks that it was obligated to
perform under the 1992 contract.
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