Antonio B. Secapure - Page 6

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          or sell any equipment.  We disagree.  Petitioner’s 1988 purchase            
          document provides that petitioner bought tools, equipment, office           
          fixtures, accessories, goodwill, and inventory needed to operate            
          the Chevron gas station.  In 1995, petitioner sold tools,                   
          equipment, office fixtures, accessories, and inventory needed to            
          operate, and the right to operate, the Chevron gas station.  The            
          1995 sale document states that petitioner sold the Chevron gas              
          station business, “including all improvements, fixtures,                    
          equipment”.  These documents contradict petitioner’s testimony              
          that he did not buy or sell equipment or other depreciable                  
          property.  We give more weight to the documentary evidence on               
          this point than to petitioner’s testimony.                                  
               In 1988, petitioner and the seller allocated $5,000 of the             
          $65,000 purchase price to goodwill.  Goodwill was not depreciable           
          in 1988.2  Sec. 1.167(a)-3, Income Tax Regs.  The basis of                  
          depreciable property is reduced by the amount of allowable                  
          depreciation even if the taxpayer does not claim a depreciation             
          deduction.  Sec. 1016(a)(2); sec. 1.1016-3(a)(2)(i), Income Tax             
          Regs.  Petitioner has not shown that he had any basis remaining             
          in property (other than $5,000 for goodwill) he sold relating to            



               2  Sec. 197(a) provides that goodwill is amortized ratably             
          over 15 years.  Sec. 197 generally does not apply to property               
          acquired before Aug. 11, 1993.  Omnibus Budget Reconciliation Act           
          of 1993, Pub. L. 103-66, sec. 13261(g), 107 Stat. 540.                      





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