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On Schedules F, petitioners claimed depreciation deductions
for the truck, the farm buildings on the DeMoore, Sioux Valley,
and Ross farms, and the installed tile on the Ross farm using the
straight-line method for the years at issue.
The truck was placed in service on January 1, 2001. On the
2001 return, petitioners claimed a $7,000 depreciation deduction
for the truck, depreciating the $35,000 cost of the truck over 5
years using the straight-line method. On the 2002 return,
petitioners attempted to elect to expense $24,000 of the cost of
the truck under section 179. On the 2002 return, they deducted
the $24,000 expensed amount plus $1,000 of depreciation for the
truck. On the 2003 return, petitioners deducted $1,000 of
depreciation for the truck.
Petitioner did not allocate the purchase prices of the
DeMoore, Sioux Valley, and Ross farms between the land and the
improvements on the farms. Rather, he estimated the fair market
values of the improvements and used those amounts as his bases in
the improvements. He estimated that the fair market value of the
DeMoore farm buildings was $75,000, that the fair market value of
the house on the Sioux Valley farm was $25,000, that the fair
market value of the Ross farm buildings was $50,000, and that the
fair market value of the tile installed on the Ross farm was
$10,000.
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