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vehicle. The vehicle is the same one petitioner used for travel
and transportation, and the business use claimed is the book
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
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Last modified: November 10, 2007