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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.
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
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Last modified: March 27, 2008