Augusto & Maria Negret - Page 8

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          * * in lieu of substantiating the actual costs.”  Rev. Proc.                
          2002-61, sec. 11, 2002-2 C.B. 616, 623, provides that for 2003 a            
          taxpayer may deduct 36 cents per mile of business use “in lieu of           
          all operating and fixed costs”, which are defined as including              
          insurance.  Id. sec. 5.03, 2002-2 C.B. at 618.                              
               Petitioners claimed the 36-cent rate for the claimed 7,440             
          miles of business use of Maria’s vehicle, for a deduction of                
          $2,678.  Respondent allowed this mileage claim in full.  See                
          supra table 1.  This 36-cent mileage rate includes insurance and            
          is in lieu of a deduction for substantiated actual costs.  Having           
          used--and been allowed--the standard rate for 2003, petitioners             
          are not entitled to deduct in addition any of the listed                    
          operating and fixed costs, including insurance.                             
               We hold for respondent on this issue.                                  
          B.  Depreciation                                                            
               On their 2003 tax return, petitioners claimed that they                
          acquired $24,855 of leasehold improvements on February 3, 2003.             
          They claimed that all of this property was eligible for 30-                 
          percent special depreciation of $7,457, plus regular depreciation           
          of $3,480, for a total 2003 depreciation deduction of $10,937.              
          Petitioners’ 2003 tax return was professionally prepared.                   
          Petitioners proceeded pro se at the trial, but their tax return             
          preparer was allowed to sit with them at the counsel table and to           
          assist them.                                                                

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