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miles of business use by the standard 2003 mileage rate of 36
cents. The claimed $1,180 insurance expense (supra table 1) is
for the same vehicle as the claimed $2,678 car and truck
expenses.
Table 2 shows the information on a depreciation schedule
attached to petitioners’ 2003 tax return.
Table 2
Item Information
Description of property Leasehold imp.
Date acquired 02/03/03
Cost or other basis $24,855
Depreciable basis $17,398
Accumulated depreciation [No entry]
Method used MACRS
Life or rate 5.0
Depreciation for 2003 $10,937
ADS depreciation for 2003 $3,480
On the Form 4562 (Depreciation and Amortization) attached to
their 2003 tax return, petitioners claimed a $7,457 special
depreciation allowance and an MACRS depreciation deduction of
$3,480, for a total of $10,937.4
4 Sec. 168(k)(1) provides for an additional depreciation
deduction of 30 percent of the adjusted basis of qualified
property, but requires the adjusted basis to then be reduced by
this additional deduction before computing the amount otherwise
allowable as a depreciation deduction. The $7,457 claimed
special depreciation allowance is 30 percent of the claimed
$24,855 cost or other basis. See supra table 2. The $24,855
basis minus the $7,457 special depreciation leaves the $17,398
depreciable basis, see supra table 2, used to calculate the
remaining depreciation.
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Last modified: March 27, 2008