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address only whether the expenses were ordinary and necessary,
and whether they were paid or incurred in connection with the
business.
A. Depreciation and Section 179 Expense
For 2001, petitioner made an election under section 179 to
expense a portion of the cost of the Astro Van. Petitioner
claimed a $17,886 deduction, representing a business usage of
63.88 percent multiplied by a reported total cost of $28,000.3
Respondent determined that petitioner was not eligible to make
the election. Respondent instead allowed petitioner a
depreciation deduction of $1,071 and disallowed the remaining
$16,815 claimed on Schedule C.
For 2002, petitioner claimed depreciation and section 179
expense of $5,378. Respondent allowed petitioner a deduction of
$2,401 for depreciation expense and disallowed the remaining
$2,977.
In general, a taxpayer is allowed as a depreciation
deduction a reasonable allowance for the exhaustion, and wear and
tear of property used in a trade or business. Sec. 167(a).
Under section 179, a taxpayer may elect to expense the cost of
certain property rather than capitalizing and depreciating the
cost over time. See sec. 179(a); Govier v. Commissioner, T.C.
3 The parties stipulated that the cost of the Astro Van
after rebate was $25,379. Petitioner did not explain why she
calculated the sec. 179 deduction based on a cost of $28,000.
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