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Petitioners claimed depreciation deductions for the
buildings on the DeMoore farm, the Sioux Valley farm, and the
Ross farm. Respondent argues alternatively that petitioners are
not entitled to the depreciation deductions because they did not
use the buildings in their farming activities, the depreciation
periods had expired, and/or they have not established their cost
bases in the buildings. We agree with respondent on all three
points.
Petitioner bought the 160-acre DeMoore farm from the Federal
Farm Credit Association in 1986 for $129,000. The buildings on
the farm included a house, four barns (the hog raising barn, the
granary, the storage building, and a fourth barn), a pole shed,
and two silos. Petitioner did not allocate the cost of the farm
between the land and the buildings. He estimated that the fair
market value of the DeMoore farm buildings was $75,000 and
allocated that amount to the buildings on the farm. He used the
house as an office and for lodging. He did not use the pole
shed, the silos, or the barns in his farming operations. On
their returns, petitioners reported that the buildings were
placed in service in March 1986, had a recovery period of 15
years, and had a cost basis of $75,000. They deducted $5,000
depreciation for 2001 and 2002.
Petitioners are not entitled to deductions for depreciation
of the pole shed, the silos, or the barns for any of the years at
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