- 11 -
The new houseboat was approximately 43 feet long and 28 feet
wide. It had one floor with three rooms including a living area,
a photo studio, and office space, and an open-air deck on top
which included an outdoor cafe. Adjacent to the new house boat
was the floating garage where Mr. Reeves’s boat and jet skis and
petitioner’s tables and chairs were stored. The garage was
covered and securely locked.
Petitioner and Mr. Reeves shared the costs of the floating
structures’ construction. Mr. Reeves paid $80,717 in 1995 and
petitioner paid a total of $185,327: $95,046 in FYE June 30,
1995, and $90,281 in FYE June 30, 1996. Petitioner capitalized
the $185,327 and depreciated the costs over a 39-year period.
Petitioner reported these expenditures on its Forms 4562,
Depreciation and Amortization, as leasehold improvements
involving nonresidential real property and claimed depreciation
deductions of $721 and $2,726 in the fiscal years at issue,
respectively.
Petitioner and UMI used the floating structures for
promotional events, meetings, and advertising photo shoots.
Beginning in 1996, Mr. Reeves used the floating structures for
personal purposes approximately 10 times a year. Neither
petitioner nor Mr. Reeves kept a log of the use of the floating
structures.
Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
Last modified: November 10, 2007