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receipts from the sale of suntan products grew to $2,999,000,
with $1,800,000 profit.
The Court finds that petitioner showed a sufficient
connection between the $1,105,276 paid in advertising expenses
and its business of producing and selling suntan lotion products.
Therefore, this Court finds petitioner is entitled to deduct the
$1,105,276 in advertising expenses under section 162(a) for FYE
June 30, 1996.
IV. Floating Structures
Petitioner contends that it may depreciate its cost of
building the floating structures because the structures were used
primarily for business purposes.
Respondent does not dispute petitioner’s costs incurred
building the floating structures. Rather, respondent contends
that petitioner failed to establish the floating structures were
used in petitioner’s business during the fiscal years at issue.
Section 167(a)(1) allows as a depreciation deduction a
reasonable allowance for the exhaustion, wear and tear, and
obsolescence of property used in a trade or business.34 The
taxpayer bears the burden of proving the Commissioner’s
determinations are incorrect. Rule 142(a). Furthermore, each
deduction must be carefully scrutinized when the taxpayer is a
34 Petitioner did not argue that the floating structures
were property held for the production of income under sec.
167(a)(2) or that the floating structures qualify for
depreciation as entertainment facilities under sec. 274(a)(1).
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