Leo and Evelyn Trentadue - Page 2

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               GERBER, Judge:  Respondent determined income tax                       
          deficiencies for petitioners’ 1999 and 2000 tax years in the                
          amounts of $12,339 and $5,473, respectively.  The deficiencies              
          are solely attributable to respondent’s adjustments to items                
          connected with petitioners’ farming activity, which involved the            
          growing of grapes for the production of wine.  The issues                   
          remaining for our consideration involve the class life and                  
          depreciation recovery periods for three different assets used by            
          petitioners in their farming activity.  In particular we consider           
          whether petitioners’ wine grape trellises, irrigation systems,              
          and/or well should be depreciated as land improvements, as                  
          determined by respondent (20-year class life) or as agricultural            
          equipment, as claimed by petitioners (10-year class life).                  

               Petitioners are husband and wife and resided in Geyserville,           
          California, at the time their petition was filed in this case.              
          Petitioners have operated, as a sole proprietorship, the                    
          Trentadue Winery and Vineyards (farm property) primarily in the             
          immediate vicinity of their personal residence.  In addition to             
          petitioners’ residence, the farm property includes a winery, a              
          vineyard, an event center, and a well.  During 1999 and 2000, the           
          vineyard consisted of approximately 85 acres planted with                   
          grapevines.  Petitioners sell approximately 75 percent of their             

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Last modified: November 10, 2007