Schrader v. Commissioner, Docket No. 2277-74.
| Decision Date | 23 December 1975 |
| Docket Number | Docket No. 2277-74. |
| Citation | 1975 TC Memo 364,34 TCM (CCH) 1572 |
| Parties | Erma M. Schrader v. Commissioner. |
| Court | U.S. Tax Court |
Erma M. Schrader, pro se, 4168 Taylor Blvd., Louisville, Ky. Philip G. Owens, for the respondent.
Memorandum Findings of Fact and Opinion
Respondent determined a deficiency in petitioner's Federal income tax for the calendar year 1970 in the amount of $1,698.32.
The issues for decision are (1) the proper amount of depreciation, if any, to which petitioner is entitled in 1970 on an air conditioner, and (2) the proper amount of petitioner's loss upon the sale in June 1970 of a coin laundry or laundromat. The resolution of the issue with respect to the loss on the sale in 1970 of the laundromat requires a determination of petitioner's remaining basis in the equipment used in the laundromat, including the air conditioner, at the time of the sale.
Petitioner is an individual who resided in Louisville, Kentucky at the time the petition in this case was filed. Petitioner filed her individual income tax return for the calendar year 1970 on January 7, 1971.1 Petitioner attached to this return three Schedule C's, "Profit (or Loss) From Business or Profession," one for a beauty supply house, another for a coin laundry, and the third for a car wash business. She also listed on the return receipts from and expenses in connection with certain rental property. On this return she claimed, under the designation "Sold Laundry Loss," an amount of $9,615.23 which resulted in a total loss when combined with other losses claimed by petitioner of $14,221.76. On the page on which the loss of $14,221.76 was shown and below the statement of this claimed loss the following appeared:
If you will send this refund of $8,446.97, that is legally due me, I will pay you the tax you say I owe for 1963, 1964, and 1965. I do not owe this and never did, but will pay it to keep from hiring an attorney, after you make this refund that is due me. If you do not make this refund, then I will hire an attorney to clear me of the 1963, 64, and 65 lies and if you will not make the refund I will use it from year to year until it is used up. As soon as this is cleared up, I will tear the Car Wash down as the equipment is worn out and it is not doing any good, this will be another big loss I will apply.
On April 23, 1971, petitioner filed on Form 1040 a document entitled "Amended Return for 1970 per Tax Court Decision" to which she again attached Schedule C's for the beauty supply house, the car wash, and the coin laundry business and reported certain receipts from and expenses in connection with rental property. On this return she reported profit from each of the activities shown on the Schedule C's and from her rental receipts. She reported a total adjusted gross income of $10,730.72, and on page one of the form under stated as follows:
On March 25, 1974, petitioner filed with the District Director of Internal Revenue in Louisville, Kentucky a document on Form 1040X, "Amended U.S. Individual Income Tax Return" for the year 1970 to which she again attached three Schedule C's, one for the beauty supply house, one for the coin laundry, and one for the car wash business, and reported rental receipts. On this "amended return" petitioner reported income from her businesses and rental receipts of $14,386.52 from which she deducted $9,678.08 to arrive at income prior to personal exemption. Included in the $9,678.08 deduction was an item designated "Coin Laundry Loss, $4,796.59." Attached to this Form 1040X was a document in the form of a letter stating, among other things, that she "did not make a $513.30 mistake on the car wash and you will have to prove I did."
Under date of March 15, 1974, respondent mailed to petitioner the notice of deficiency which forms the basis for the petition in this case. In this deficiency notice respondent decreased the depreciation claimed by petitioner, decreased petitioner's claimed loss on the sale of the coin laundromat, made a correction of $79 stated to be a mathematical error, decreased the contributions claimed by petitioner, and increased the deductions for business expenses and sales tax and Kentucky income tax over that claimed by petitioner. In explanation of the adjustments with respect to depreciation and loss on the sale of the laundromat or coin laundry, respondent stated:
Exhibit A attached to the notice of deficiency shows the following:
Depreciation
Date Salvage Depreciable Prior Per Remaining
Acquired Asset Cost Value Basis Depreciation Allowable Return Basis
1964 Car Wash, #1 Building $17,477.62 $ - $ - $ 3,845.05 $ $699.10 $ - $ -
1964 Car Wash, #1 Equipment 5,688.40 568.84 5,119.56 3,128.62 511.96 3,600
1965 Car Wash, #2 Building 7,911.85 - - 1,582.35 316.47 -
1965 Car Wash, #2 Equipment 5,688.40 568.84 5,119.56 3,128.62 511.96
1958 Coin Laundry Equipment 13,304.47 1,000.00 12,304.47 12,304.47 - - 1,000.00 Sold 1970
1960 Coin Laundry Equipment 11,231.88 500.00 10,731.88 10,731.88 - - 500.00 Sold 1970
1965 Coin Laundry Equipment 1,403.33 150.00 1,253.33 626.65 - - 776.68 Sold 1970
1962 Bluegrass Beauty Equipment 1,588.30 300.00 1,288.30 1,030.64 128.83 260
1959 4168 Taylor Blvd. Furniture 500.00 50.00 450.00 450.00 - -
1961 " " " " 250.00 25.00 225.00 202.50 22.50
1962 " " " " 150.00 15.00 135.00 108.00 13.50
1963 " " " " 600.00 60.00 540.00 378.00 54.00 125
1963 4160 Taylor Blvd. Furniture 1,100.00 110.00 990.00 693.00 99.00
1964 " " " " 400.00 40.00 360.00 216.00 36.00 300
1965 " " " " 1,500.00 150.00 1,350.00 675.00 135.00
1964 1404 Bluegrass Furniture 2,500.00 250.00 2,250.00 1,350.00 225.00
1965 " " " " 1,550.00 155.00 1,395.00 697.50 139.50 300
1968 Mercury Auto 3,500.00 - 3,500.00 1,400.00 - Traded 1970
1970 Buick Auto 6,603.51 660.35 5,943.16 - 594.32 860
Additional Depreciable Items Added by Regional Counsel in Settlement
of 1968 and 1969 Years
1963 Washers 1,320.98 132.09 1,188.89 237.78 - - 1,083.20 Sold 1970
1966 Washers 2,262.91 - 2,262.91 452.58 - - 1,810.33 Sold 1970
1967 Washers 2,201.63 - 2,201.63 440.32 - - 1,761.31 Sold 1970
_________ _______
Totals .......................................................................... $3,487.14 $5,445
Depreciation disallowed ......................................................... 1,957.86
__________ _______
$5,445.00 $5,445
_________
Remaining basis of items sold--Total .................................................................. $6,931.52
Sales price ........................................................................................... 5,000.00
_________
Corrected loss on sale ................................................................................ $1,931.52
At the trial petitioner offered in evidence as her computation of her loss on the sale of the laundromat a document on Form 1040X, "Amended U.S. Individual Income Tax Return," for 1970 to which she attached a Schedule C with respect to profit or loss from the coin laundry. On this Schedule C, among other deductions, she claimed under ...
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