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However, respondent allowed petitioners only a $1,520 CGS
deduction “Since all of the books purchased were not sold during
taxable year 2000”.
Petitioners claim that “Some of this inventory was utilized
for garnering bookstores as distributors of products, and for
advertising/publicity packages to newspapers, consumer health
information organizations, television stations, and radio
stations for printed reviews.” Petitioners presented an invoice
from Bacon’s Mailing Service that indicated that they had
purchased 511 press kits that would contain one paperback book
each when mailed or shipped. Petitioners did not provide any
evidence that they actually mailed or shipped the press kits,
other than UPS receipts that indicated books with a declared
value of $550 had been shipped. Petitioners have not shown that
the $550 declared value was not included in the $1,520 CGS
allowed by respondent, nor have they shown that they are entitled
to CGS in excess of that allowed by respondent. Accordingly, the
Court sustains respondent on the CGS issue for taxable year 2000.
E. Depreciable Assets
A taxpayer may elect to deduct as a current expense the cost
of any section 179 property, with certain dollar limitations,
that is acquired for purchase in the active conduct of a trade or
business and placed in service during the taxable year.
Sec. 179(a), (b), (d)(1); see sec. 1.179-4(a), Income Tax Regs.
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Last modified: March 27, 2008