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After concessions,1 the issues for decision, all relating to
petitioners’ tax year 1999, are:
1. Whether respondent bears the burden of proof under
section 7491(a)2 as to respondent’s deficiency determination. We
hold that petitioners bear the burden of proof.
2. Whether petitioners may deduct depreciation of their
Crenshaw Blvd. and W. 66th Street rental properties in an amount
greater than respondent allowed. We hold that they may not with
respect to the W. 66th Street property, and that depreciation
with respect to the Crenshaw Blvd. property is calculated as
discussed below.
3. Whether petitioners may deduct a deposit of $30,087.57
they paid toward the purchase of the Crenshaw Blvd. rental
property. We hold that petitioners must capitalize that payment
and include it in their basis in the Crenshaw Blvd. property, and
recover that cost through their depreciation deduction discussed
in issue 2.
1 Petitioners concede that they are not entitled to deduct
$1,466 for charitable contributions, $4,725 for employee business
expenses, $699 for miscellaneous expenses, and $1,601 for
Schedule C (Profit or Loss From Business) losses.
2 Section references are to the Internal Revenue Code as
amended and in effect in 1999. Rule references are to the Tax
Court Rules of Practice and Procedure.
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Last modified: May 25, 2011