Jin Xiong - Page 16

                                       - 15 -                                         
          vehicle.  The vehicle is the same one petitioner used for travel            
          and transportation, and the business use claimed is the book                
          writing project.                                                            
               Amounts paid to acquire machinery, equipment, and similar              
          property having a useful life substantially beyond the taxable              
          year are capital expenditures and generally are not deductible.             
          Sec. 263(a)(1); sec. 1.263(a)-2, Income Tax Regs.  If the capital           
          expenditure is for property used in a trade or business or held             
          for the production of income, the taxpayer may be allowed a                 
          deduction for depreciation under section 167.  See, e.g.,                   
          INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 83-84 (1992).                   
          Alternatively, the cost may be expensed pursuant to section 179             
          if the requirements of that section are satisfied.  The cost may            
          not be expensed, however, in the absence of an election.  Sec.              
          179(c); Visin v. Commissioner, T.C. Memo. 2003-246; sec. 1.179-5,           
          Income Tax Regs.  Furthermore, section 179 limits the amount of             
          the deduction to the amount of taxable income derived from the              
          trade or business, although a disallowed deduction may be carried           
          over to later tax years.  Sec. 179(b)(3)(A) and (B).                        
               We have already found that petitioner’s book writing project           
          was not a separate trade or business.  The vehicle was not a                
          capital asset in petitioner’s hands, and therefore he is not                
          entitled to depreciate it or to expense any part of its cost                
          under section 179.  Even if petitioner’s book writing project had           

Page:  Previous  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next 

Last modified: November 10, 2007