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farm. There were improvements on the Sioux Valley farm
consisting of a house and a well. Petitioner did not use the
house or the well in his farming operations. He estimated that
the fair market value of the house on the Sioux Valley farm was
$25,000 and depreciated it using the straight-line method over 10
years. Petitioners are not entitled to deduct the $2,500 they
claimed for 2001 for depreciation of the house and the well
because petitioner did not use the house or the well in his
farming or rental activity and the 10-year depreciation period
expired in 2000. Their failure to claim the depreciation
deductions for 1998 and 1999 does not extend the depreciation
period into later years. See sec. 1.167(a)-10(a), Income Tax
Regs.
Petitioner purchased the Ross farm from the Federal Farm
Credit Association in 1997 for $154,000. Improvements on the
Ross farm buildings consisted of two buildings (a barn and a
storage building) and installed drainage tile. Petitioner
estimated that the value of the Ross farm buildings was $50,000.
He did not use the barn in his farming operations but
occasionally used the storage building to store soybeans.
Petitioners are not entitled to depreciation deductions for the
barn because petitioner did not use it in his farming or rental
activity. Although he occasionally used the storage building
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