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Depreciation
Petitioners claimed an $8,586 depreciation and section 179
expense deduction. Pursuant to section 167, a depreciation
deduction is generally allowed for the exhaustion, wear, and tear
of property used in a trade or business or held for the
production of income. The purpose of the deduction for
depreciation is to allow the taxpayer to recover over the useful
life of the property its cost or other basis. United States v.
Ludey, 274 U.S. 295, 300-301 (1927).
Petitioners claimed a depreciation deduction on their
Schedule C for a vehicle placed in service in 2002 as well as a
computer purchased during that year. Other than petitioner’s
uncorroborated, self-serving testimony, which we do not find
probative, petitioners offered nothing to substantiate that the
vehicle and the computer were not used primarily for personal
purposes. Accordingly, on account of the lack of substantiation
that those items of property were used in the real estate
activity or otherwise held for the production of income,
respondent is sustained in disallowing the depreciation deduction
of $8,586.
Other Interest
Petitioners claimed a deduction of $336 for “other
interest”, which related to interest on their credit cards.
Petitioners offered into evidence statements of their Chevron and
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