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petitioners a deduction on their 1997 return for part of the cost
of MH #22. Before the case went to trial, the parties fully
stipulated the facts under Rule 122.2
Discussion
Section 179(a) allows a taxpayer a deduction--in 1997, one
of up to $18,000--for property (prosaically called “Section 179
property”) used in his trade or business that he must otherwise
add to his capital account and depreciate. The deduction comes
with numerous restrictions, one of which is that any property
described in section 50(b) is ineligible to be section 179
property. Sec. 179(d)(1). Section 50(b) itself defines terms
for various tax credits and deductions granted elsewhere in the
Code. It excludes certain kinds of property from these benefits,
including “property which is used predominantly to furnish
lodging or in connection with the furnishing of lodging.” Sec.
50(b)(2). This is then followed by exceptions to the exclusion,
one of which is “property used by a hotel or motel in connection
with the trade or business of furnishing lodging where the
predominant portion of the accommodations is used by transients.”
Sec. 50(b)(2)(B).3
2 All Rule references are to the Tax Court Rules of Practice
and Procedure, and all section references are to the Internal
Revenue Code as in effect for the year at issue.
3 These exclusions first became law in the Revenue Act of
1962, Pub. L. 87-834, 76 Stat. 960, as limits on the then-new
investment tax credit. President Kennedy expected this incentive
(continued...)
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