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involving debtors. The receivership was the result of a civil
enforcement action brought by the Securities and Exchange
Commission (SEC) against Alpha Telcom in 2001 in the U.S.
District Court for the District of Oregon. The District Court
appointed a receiver in September 2001 to take over the
operations of Alpha Telcom and to investigate its financial
condition. On February 7, 2002, the District Court held that the
pay phone scheme was actually a security investment and that
Federal law had been violated by Alpha Telcom because the program
had not been registered with the SEC. The U.S. Court of Appeals
for the Ninth Circuit affirmed this decision on December 5, 2003.
Respondent disallowed the depreciation deduction petitioners
claimed because “the telephones are located in a place that * * *
[petitioners did] not own or operate as a trade or business” and
“* * * [petitioners] did not have a depreciable interest in the
payphone”. Respondent also disallowed the disabled access credit
petitioners claimed because no business reason has been given or
verified for petitioners to comply with the ADA.
Discussion
I. Burden of Proof
Section 7491 is applicable to this case because the
examination in connection with this action was commenced after
July 22, 1998, the effective date of that section. See Internal
Revenue Service Restructuring and Reform Act of 1998, Pub. L.
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