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Respondent contends petitioner is not entitled to a section
167 depreciation deduction or a section 179 expense deduction
because he did not prove he invested in or purchased the
equipment that he purportedly used in his medical equipment
rental business.
Petitioner and Dr. Karason testified that, pursuant to an
oral agreement, Dr. Karason assigned the medical equipment to
petitioner, and petitioner invested in and purchased the
equipment when he wired the bank loan funds to Dr. Karason on
January 9, 2001. They also testified that the FMV of the medical
equipment was determined pursuant to consultations with Gill
Podiatry and Moore Medical, purveyors of podiatry equipment.
Outside of the handwritten depreciation schedule, petitioner did
not produce documentation supporting either the cost or the FMV
of the medical equipment or that these consultations actually
occurred. Petitioner also testified that he did not obtain
insurance covering the medical equipment.
Petitioner and Dr. Karason testified that immediately after
petitioner purchased the medical equipment, pursuant to an oral
10(...continued)
In this case, petitioner bears the burden of proof because
he did not: (1) Introduce credible evidence with respect to any
factual issue relevant to ascertaining his liability; (2)
substantiate his expenses; (3) maintain the required records; and
(4) cooperate with respondent's requests. Sec. 7491(a); see
Higbee v. Commissioner, 116 T.C. 438, 440-441 (2001).
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Last modified: November 10, 2007