- 11 -
conduct of a trade or business. Sec. 179(d)(1). The term
“purchase” means generally “any acquisition of property”. Sec.
179(d)(2); sec. 1.179-4(c), Income Tax Regs. Property is deemed
acquired when reduced to physical possession, or control.
Baicker v. Commissioner, 93 T.C. 316, 322 (1989); secs. 1.48-
2(a)(2)(b)(6), 1.167(c)-(1)(a)(2), Income Tax Regs.
Section 167 allows a depreciation deduction for the
exhaustion, and wear and tear of property used in the trade or
business or held for the production of income. Depreciation is
not necessarily predicated upon ownership of the property but
rather upon an investment in property.9 Arevalo v. Commissioner,
124 T.C. 244, 251-252 (2005), affd. 469 F.3d 436 (5th Cir. 2006);
Gladding Dry Goods Co. v. Commissioner, 2 B.T.A. 336, 338 (1925);
Stiebling v. Commissioner, T.C. Memo. 1994-233, affd. without
published opinion 113 F.3d 1242 (9th Cir. 1997). The taxpayer
bears the burden of proving the Commissioner’s determinations are
incorrect.10 See Rule 142(a).
9 “The important question is * * * who made the investment
of the capital which is to be recovered over the period of the
exhaustion of the property. The one who made the investment is
entitled to its return.” Gladding Dry Goods Co. v. Commissioner,
2 B.T.A. 336, 338 (1925).
10 The burden of proof may shift to the Commissioner under
sec. 7491(a) if the taxpayer has produced credible evidence with
respect to a factual issue relating to the tax liability at
issue, has met substantiation requirements, maintained records,
and cooperated with the Secretary’s reasonable requests for
documents, witnesses, and meetings.
(continued...)
Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
Last modified: November 10, 2007