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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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