1 Unless otherwise indicated, all section references are

to the Internal Revenue Code in effect for the taxable year in

issue. All Rule references are to the Tax Court Rules of

Practice and Procedure.

T.C. Memo. 1998-356

UNITED STATES TAX COURT

LANA FAYE GREEN, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 19776-97. Filed October 5, 1998.

Lana Faye Green, pro se.

Matthew J. Fritz, for respondent. 

MEMORANDUM OPINION

DINAN, Special Trial Judge: This case was heard pursuant

to the provisions of section 7443A(b)(3) and Rules 180, 181, and

182.1
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Respondent determined deficiencies in petitioner's Federal

income taxes for 1993 and 1994 in the amounts of $765.33 and

$8,499, respectively.

After concessions by the parties, the issue remaining for

decision is whether petitioner is entitled to a section 179

expense deduction for 1994 in excess of the amount allowed by

respondent.

Some of the facts have been stipulated and are so found. 

The stipulations of fact and attached exhibits are incorporated

herein by this reference. Petitioner resided in Trotwood, Ohio,

on the date the petition was filed in this case.

Petitioner has worked as a self-employed attorney during and

since the taxable years in issue. As of the end of 1994, she was

also the majority shareholder of Master Plan Supplies, Inc.

(Master Plan), which was incorporated under the laws of the State

of Ohio on November 9, 1994. The parties have stipulated that

Master Plan properly elected to be treated as an S corporation

for its 1994 taxable year.

On a Schedule C attached to her 1994 return, petitioner

claimed a "depreciation and section 179 expense deduction" in the

amount of $14,624 as an expense of her law practice. On a

Schedule E attached to her 1994 return, petitioner claimed a

"section 179 expense deduction" in the amount of $9,000 in

connection with her interest in Master Plan. In support of the

claimed deductions, petitioner attached to her return two Forms
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4562, a self-prepared "Depreciation/Amortization Report", and a

self-prepared "Section 179 Expense Report".

On the first Form 4562, petitioner claimed depreciation

deductions as follows:

MACRS depreciation for assets placed in

 service only during your 1994 tax year $1,216

Other depreciation 1,866

Listed property 1,792

Total $4,874

The self-prepared Depreciation/Amortization Report describes

all of the individual items of depreciated property. These items

include a copier, filing cabinet, camera, desk, typewriter,

Dictaphone, Ford Mustang, and several computers. The total of

the "1994 Depreciation/Amortization" for the items described on

the report is $4,874.

On the second Form 4562, petitioner claimed a section 179

expense deduction in the total amount of $15,750. The selfprepared Section 179 Expense Report reveals that the total amount

claimed includes the following:

 Description Business Use Elected Section

Activity of Property Cost/Basis 179 Expense

Sch. C R.N./Attorney Computers $1,842 $1,000

Sch. C R.N./Attorney Computer 4,014 2,000

Sch. C R.N./Attorney Copier 5,384 3,000

Sch. C R.N./Attorney Camera 572 500

Sch. C R.N./Attorney Desk 450 250

From K-1's 9,000

Totals $12,262 $15,750

The total amount of the depreciation and section 179 expense

deductions listed on the Forms 4562 and the self-prepared reports
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is $20,624. This amount is $3,000 less than the $23,624 of

depreciation and section 179 expense deductions claimed by

petitioner on the Schedule C and the Schedule E.

In the statutory notice of deficiency dated September 16,

1997, respondent disallowed $3,000 of the $14,624 depreciation

and section 179 expense deduction claimed on the Schedule C. The

$11,624 amount which was allowed by respondent includes all of

the amounts listed on the self-prepared reports, with the

exception of the $9,000 section 179 expense deduction listed on

the Section 179 Expense Report as "From K-1's". Respondent also

disallowed in the statutory notice of deficiency the entire

Schedule E loss claimed by petitioner, including the $9,000

section 179 expense deduction. The property for which the $9,000

was claimed is not listed anywhere on petitioner's return or the

attachments to her return. The only Schedule K-1 attached to her

return lists her share of Master Plan's section 179 expense

deduction as zero.

The parties submitted a copy of Master Plan's Federal income

tax return (the Form 1120S) for its taxable year ended December

31, 1994. Although the Form 1120S and its attachments contain a

great number of erroneous entries and inconsistencies, it appears

that Master Plan elected on a Form 4562 attached to the Form
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2 The total cost of the Neon was listed as $15,606. The

claimed depreciable cost in the amount of $13,265 took into

account only 85 percent of the total listed cost, since that is

the percentage for which the Neon was claimed to have been used

in Master Plan's business. 

1120S to treat $10,000 of the claimed $13,265 depreciable cost of

a 1995 Plymouth Neon (the Neon) as a section 179 expense.2

The Neon was purchased by petitioner in her own name in

September 1994 from Salem Chrysler-Plymouth, Inc. in Dayton,

Ohio. A State of Ohio memorandum certificate of title issued

September 30, 1994, lists petitioner as the owner of the Neon. 

Petitioner did not transfer ownership of the Neon to Master Plan

prior to the end of 1994.

On September 29, 1997, nearly 2 weeks after the statutory

notice of deficiency was issued, respondent received an amended

return from petitioner for her 1994 taxable year. On the amended

return, she again claimed a Schedule C depreciation and section

179 expense deduction in the total amount of $14,624. However,

she attached to the amended return a single Form 4562 on which

she claimed depreciation and section 179 expense deductions in

the total amount of $16,304. She did not claim a section 179

expense deduction on the Schedule E attached to her amended

return. On self-prepared reports, similar to the reports

attached to her original return, petitioner claimed depreciation

deductions in the total amount of $4,091 and section 179 expense

deductions in the total amount of $12,213.
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The self-prepared Section 179 Expense Report attached to her

amended return reveals that the total amount claimed as a section

179 expense deduction includes the following:
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 Description Business Use Elected Section

Activity of Property Cost/Basis 179 Expense

Sch. C R.N./Attorney Computers $1,842 $1,842

Sch. C R.N./Attorney Computer 4,014 4,000

Sch. C R.N./Attorney Copier 5,384 5,000

Sch. C R.N./Attorney Filing cabinet 621 621

Sch. C R.N./Attorney Camera 572 500

Sch. C R.N./Attorney Desk 450 250

From K-1's 

Totals $12,883 $12,213

Petitioner made no claim on the amended return for a section

179 expense deduction with respect to the Neon, either as a

Schedule C expense of her law practice or as a Schedule E passthrough item of Master Plan. In her pretrial memorandum,

petitioner listed as one of the issues to be decided in this

case: "Whether the petitioner is entitled to claim depreciation

and Section 179 election for various items including a 1995 Neon

automobile and what is the correct amount of the deduction." She

failed, however, to further address the issue in the pretrial

memorandum. At trial, petitioner alleged that she filed a second

amended return on which she claimed the Neon as a section 179

expense deduction. A copy of this second amended return was not

produced at trial. Petitioner did not testify or otherwise

introduce evidence of the extent, if any, that the Neon was used

in Master Plan's business or her law practice. In her posttrial

memorandum, petitioner argues that she is entitled to section 179

expense deductions for 1994 for her costs of purchasing the

following items:
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Computer $1,842 Camera $953

Computer 4,014 Desk 450

Copier 5,384 Typewriter 199

Filing Cabinet 621 Neon 13,679

Petitioner contends that she is entitled to section 179

expense deductions for these items because she timely filed her

original election under section 179. She argues that she is

allowed to amend her original election and claim the maximum

deduction for 1994 in the amount of $17,500. Respondent has not

consented to petitioner's revocation or change of the items or

costs claimed with her original election.

Section 179(a) generally allows a taxpayer to elect to treat

the cost of section 179 property as a current expense in the year

the property is placed in service, within certain dollar

limitations. See sec. 179(b). The section 179 election must

specify the items of section 179 property to which the election

applies and the portion of the cost of each of such items which

is to be taken into account under section 179(a). Sec.

179(c)(1)(A); sec. 1.179-5(a)(1) and (2), Income Tax Regs. The

election must be made on the taxpayer's first income tax return

for the taxable year or a timely filed amended return. Sec.

179(c)(1)(B); sec. 1.179-5(a), Income Tax Regs. An election made

on an amended return is valid only if such amended return is

"filed within the time prescribed by law (including extensions)

for filing the return for [the] taxable year". Sec. 1.179-5(a),

Income Tax Regs.
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3 As explained supra p. 4, respondent also disallowed the

$3,000 claimed on the Schedule C which was not included on the

Forms 4562 and the self-prepared reports attached to the original

return.

We find that the only valid section 179 election which

petitioner made with respect to her 1994 taxable year was the one

made on her original return. The election made on her first

amended return and the other inconsistent claims made subsequent

to the issuance of the statutory notice of deficiency in this

case are not valid because they were made after the due date of

her 1994 return. Moreover, petitioner's original election is

irrevocable and binding in the absence of respondent's consent to

its revocation. Id. The specific items of section 179 property

and the respective costs thereof that petitioner selected to

deduct under section 179 may not be changed unless consent to

change them is given by respondent. Id. Since petitioner failed

to obtain respondent's consent to revoke or change her original

election, we accordingly disregard her subsequent claims for

section 179 expense deductions for items and costs different from

those listed on the Section 179 Expense Report attached to her

original return. King v. Commissioner, T.C. Memo. 1990-548.

Of the items and costs listed on the original Section 179

Expense Report, respondent disallowed only the claim for $9,000

made with respect to the Neon on the Schedule E.3 Petitioner

originally claimed that the Neon was used in the course of Master

Plan's business and that she was entitled to a passthrough
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deduction with respect to her claimed share of the section 179

expense deduction claimed by Master Plan. We reject this claim

for several reasons. First, the Neon does not constitute section

179 property with respect to Master Plan because it did not

acquire the Neon by purchase. Sec. 179(d)(1) and (2). The

record clearly shows that petitioner purchased the Neon with her

personal funds in her own name. There is no evidence or claim

that the Neon was later conveyed to or purchased by Master Plan

by the end of 1994. Second, we are not convinced that the Neon

was used in Master Plan's business. Sec. 179(d)(1). Petitioner

did not introduce any documentary or testimonial evidence at

trial which proves that the Neon was so used. Third, even if we

were to assume that the Neon qualifies as section 179 property

with respect to Master Plan's business, Master Plan is not

entitled to a section 179 expense deduction for 1994 because it

did not have any taxable income in 1994. Sec. 179(b)(3). It

follows that there is no section 179 expense deduction which may

be passed through to petitioner as a shareholder on her Schedule

K-1 and her Schedule E for 1994. Sec. 1.179-2(c)(2)(i), (3)(i),

Income Tax Regs.

Nonetheless, petitioner maintains that she is entitled to a

section 179 expense deduction for the cost of the Neon. We

gather from the record that petitioner is now claiming that the

Neon was purchased for and used in a business other than Master

Plan's. However, she has not proved or even explicitly argued
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that the Neon was used in her law practice or any other specific

business which she actively conducted during 1994. Based on the

record, we conclude that the Neon does not constitute section 179

property with respect to petitioner. We hold that petitioner is

not entitled to a section 179 expense deduction for 1994 in

excess of the amount allowed by respondent.

To reflect the foregoing,

Decision will be entered

under Rule 155.