Volume 38 — Tax Court Memorandum

Ps' petition contained no allegations of error in the deficiencies or additions to tax determined by the Commissioner. Held: the Commissioner's motion to dismiss for failure to state a claim upon which relief can be granted is granted.

Ps' petition contained no allegations of error in the deficiencies or additions to tax determined by the Commissioner. Held: the Commissioner's motion to dismiss for failure to state a claim upon which relief can be granted is granted.

Held: Deduction for Federal income taxes not allowed. Held: Deduction for Federal income taxes not allowed.

Petitioner's wholly owned corporation distributed funds to petitioner pursuant to bona fide loan transactions. Held, such distributions do not constitute dividend income to petitioner. Held: such distributions do not constitute dividend income to petitioner. Held further, amounts distributed to a second corporation and petitioner's son had no demonstrable business purpose and are, therefore, found to be constructive dividends.

Held: nature and character of losses incurred in investing in stock and debt of corporation determined. Held: nature and character of losses incurred in investing in stock and debt of corporation determined.

Held, petitioners not entitled to the benefits of sec. 1034, I.R.C. 1954, and Marinko not entitled to the benefit of sec. 121, I.R.C. 1954.

Held, petitioners not entitled to any deductions for home office expenses or social club dues in 1973 and 1974. Held: petitioners not entitled to any deductions for home office expenses or social club dues in 1973 and 1974.

Petitioners' motion to dismiss for lack of jurisdiction denied. Under the circumstances, typographical errors misstating two of the years for which the deficiencies had been determined on the front page of the notice of deficiency did not mislead petitioners.

H sold stock and agreed to receive the sales proceeds in installments. Held: under the terms of the divorce decree, the portion of the installment proceeds paid to W does not represent a nontaxable division of property, but is income to H. Heldfurther: under the terms of the divorce decree, the portion of the installment proceeds paid to W was not paid in exchange for release by her of her marital rights.…

Held: Respondent's motion to dismiss for lack of jurisdiction granted. Petition was delivered to this Court 2 days late in an envelope which bore no postmark. Held: Respondent's motion to dismiss for lack of jurisdiction granted. Petition was delivered to this Court 2 days late in an envelope which bore no postmark.

1. Payments received by Thomas M. Fahey from a partnership in which he was a partner were guaranteed payments under section 707(c), I.R.C. 1954, and were includable in his gross income. 2. Petitioner Thomas M. Fahey is collaterally estopped by his conviction under section 7201, I.R.C. 1954, for the years here involved from denying that his underpayment of tax for the years 1966 and 1967 was due to fraud. Civil fraud penalty sustained.

Petitioner claimed dependency exemption deductions on his 1972 Federal income tax return for two of his children by a past marriage. Held: As to one child, petitioner failed to carry his burden of proving that he and his former wife provided over half the support of that child. Sec. 152(e)(1)(A), I.R.C. 1954. Held further: As to the other child, petitioner failed to carry his burden of proving that he provided at least $ 1,200 for the support of that child.

Petitioner is a physician employed as a resident in a medical residency program. She excluded certain sums from income under sec. 117, I.R.C. 1954. Held: petitioner is not entitled to exclude any income under sec. 117 inasmuch as her receipts from the residency program were in consideration for services which petitioner was required or might have been required to perform. Dietz v. Commissioner,62 T.C. 578 (1974).

Held: Petitioner-wife did not sign, nor did she intend to be a party to, the 1974 joint income tax return which her husband filed in both of their names. Held: Petitioner-wife did not sign, nor did she intend to be a party to, the 1974 joint income tax return which her husband filed in both of their names. Accordingly, she is not liable for any deficiency thereon .

Petitioners received properly addressed notices of deficiency 3 days after they were mailed. Held: under the circumstances the petitions were not timely filed and respondent's motion to dismiss must be granted.

Held, respondent's motion for judgment on the pleadings, granted.

The corporate petitioner incurred automobile expenses and professional fees and dues expenses during 1973 and 1974. Held: the corporation has failed to prove deductibility of such expenditures in amounts exceeding those determined by respondent. Held further, amounts disallowed to the corporation as automobile expenses are includible in the income of the corporation's sole shareholder.

An allocation of the purchase price with respect to the sale of assets was made in an agreement between the buyer and seller. Held: the parties to the agreement are bound by the allocation of the purchase price to the various assets as set forth therein.

Certain of petitioners in docket No. 7221-75 transferred their controlling stock in a corporation to the petitioners in docket No. 6800-75. Held: based on the transaction as a whole, the excess value of the real property and building over the sale price thereof was a constructive dividend to the buyer of the corporate stock.

Held, corporate petitioner failed to prove automobile expenses in excess of amounts allowed by respondent. Held: corporate petitioner failed to prove automobile expenses in excess of amounts allowed by respondent. Held further, corporate petitioner incurred a $ 25 drug and medical supplies expense in excess of amounts allowed by respondent.

Petitioner was an intern and resident of Veterans Administration Hospital. Held: the payments are not excludable scholarship or fellowship grants. Section 117(a), I.R.C. 1954.

Taxpayer was retired from the armed services for length of service. Held, amounts received as Air Force retirement do not represent disability retirement excludable from gross income under sec. 104(a)(4). Held further, neither do such amounts represent payments received under a wage continuation plan excludable from gross income under sec. 105(d).

Held, petitioners' hog farrowing structure is a single purpose agricultural structure as defined under sec. 48(a)(1), I.R.C. 1954, as amended by the Revenue Act of 1978, and, accordingly, its entire… Held: petitioners' hog farrowing structure is a single purpose agricultural structure as defined under sec. 48(a)(1), I.R.C. 1954, as amended by the Revenue Act of 1978, and, accordingly, its entire cost qualifies for the investment credit provided by sec. 38, I.R.C. 1954.

Petitioner was a construction worker who resided in Minneapolis and whose general employment was in the Minneapolis area. After obtaining a position on a construction site in Illinois which lasted 14 to 15 months, petitioner rented out his apartment which he owned in fee. While visiting the Minneapolis area or when working on construction sites in the area after completing work in Illinois, petitioner stayed in motels and ate out in restaurants. Held, petitioner did not maintain a permanent place of residence in the Minneapolis area and expenses incurred in Illinois were not incurred while away from home.

Petitioner was an intern and resident of St. Paul-Ramsey Hospital. Held: the payments are not excludable scholarship or fellowship grants. Section 117(a), I.R.C. 1954.

P purchased the assets of X corporation. P allocated the entire price of such assets to tangible assets and subsequently claimed depreciation deductions based on the allocation. Held: the fair market value of the tangible assets determined; part of the purchase price was allocable to going-concern value.

Held, corporate petitioner allowed only a partial deduction for its payment of its sole shareholder's home telephone bills and the shareholder, also a petitioner to this Court, has equivalent dividend income. Heldfurther, individual petitioner not entitled to deduct payments from his corporation in respect of certain laundry expenses.

Held: The substantiation and thus deductibility of various expenditures determined. Held: The substantiation and thus deductibility of various expenditures determined.

Held, petitioner determined to have ordinary income and not capital gains from sale of grain grown on his farm. Held further, proper allocation of farm sale price to depreciables determined. Held: petitioner determined to have ordinary income and not capital gains from sale of grain grown on his farm. Held further, proper allocation of farm sale price to depreciables determined. Held further, basis of farm equipment determined.

(1) P, a 41-percent shareholder in a family corporation, sustained a loss upon the foreclosure and sale of a one-half interest in property that was being farmed by such corporation and that she had… Held: such loss resulted from a nonbusiness debt becoming worthless during the year. (2) Since P acquired the property by gift, both parties agreed that P's basis in the property equaled its fair market value on Dec. 7, 1920. Held, such value determined.

Decedent's will provided certain charities with transfers which did not qualify for charitable deduction treatment, since they were split gifts under section 2055(e)(2), I.R.C. 1954. Held: the settlement of a deed contest is not analogous to one of a will contest or similar claim and does not qualify the estate for a charitable deduction which did not exist otherwise.

Respondent determined that petitioner was a member of a brother-sister controlled group. Held: consideration of the stock of a person who does not own stock in all the members of a group of corporations for purposes of applying the 80 percent test of sec. 1563(a)(2)(A) is improper.

H and W operated an illegal gambling business but reported no income from such business in 1972. Held: the amount of unreported illegal gambling income, which was earned equally by H and W, determined. Held, further, H had unreported income from the operation of the gasoline station in 1972 and 1973 in the amounts determined by the Commissioner.

Petitioner organized a corporation to develop residential property in Florida. Held: The proportionate obligation for the ground lease or recreational facilities lease assumed by the purchasers of the individual units was not a part of the consideration received by the corporation for the sale of the units. Neither the corporation nor the petitioner is taxable on the capitalized value of such rentals.

The Commissioner recomputed P's income using the bank deposits method. Held: P grossly understated his income each year from 1966 through 1972; (2) the allowable dependency deductions determined; and (3) some part of the underpayment for each of the years at issue was due to P's fraud with intent to evade tax within the meaning of sec. 6653(b), I.R.C. 1954.

Petitioners incurred expenses in connection with the writing and publication of a book of poetry. Held: since petitioners failed to prove that petitioner-wife was engaged in the trade or business of being a poet or author, the expenses are not deductible as ordinary and necessary expenses of carrying on a trade or business. Sec. 162(a), I.R.C. 1954.

(1) Held, H and W must divide their community incomes, deductions, and exemptions in the manner determined by the Commissioner. Held: H and W must divide their community incomes, deductions, and exemptions in the manner determined by the Commissioner. (2) Held, H and W are entitled to various deductions only in the amounts determined by the Commissioner. (3) Held, H and W had interest income in the amount determined by the Commissioner.

Held: petitioner correctly deducted amounts as business bad debt under sec. 166(a)(1). Held: petitioner correctly deducted amounts as business bad debt under sec. 166(a)(1).

Petitioner is a physician/resident. Held, petitioner not entitled to an exclusion from income under sec. 117 for any amounts during the years in issue. Held: petitioner not entitled to an exclusion from income under sec. 117 for any amounts during the years in issue.

Three years are in issue: 1973, 1974 and 1975. Held: business travel expenses were not substantiated; heldfurther,expenses for uniform and related items were not ordinary and necessary business expenses; heldfurther, respondent's allowance for contributions in 1973 and 1974 will be sustained and equally extended to 1975; heldfurther, showing of dependency was not properly made for…

(1) The Commissioner recomputed Ps' income for 1972 using the bank deposits method. Held: Ps failed to prove that the Commissioner's deficiency determination was incorrect. (2) The Commissioner also determined that Ps' underpayment of tax was caused by negligence or intentional disregard of the rules and regulations for reporting income. Sec. 6653(a), I.R.C. 1954. Held, the Commissioner's determination is sustained.

Petitioner was the 95-percent limited partner, and AM was the 5-percent general partner, in K partnership. K purchased a shopping center from AR (an affiliate of AM), giving cash and a mortgage to AR. Held: respondent may apply section 446(b) at the partnership level. Van Raden v. Commissioner, 71 T.C. (1979); Resnik v. Commissioner,66 T.C. 74 (1976), affd.

Held, petitioner, husband, was not an innocent spouse under sec. 6013(e). Held further, petitioners are entitled to their claimed automobile expenses. Held: petitioner, husband, was not an innocent spouse under sec. 6013(e). Held further, petitioners are entitled to their claimed automobile expenses.

Held: Petitioner's advances to a corporation in which he was a stockholder and an employee were not dominantly motivated to protect his job and salary as an employee. Held: Petitioner's advances to a corporation in which he was a stockholder and an employee were not dominantly motivated to protect his job and salary as an employee. The advances were nonbusiness debts.

Petitioner owed a building which housed a social club. The building was condemned. Petitioner purchased replacement property. Held: recognition of gain upon receipt of the condemnation proceeds is limited by sec. 1033. Held further, petitioner was found to have additional unreported income.

Held, petitioners may not deduct the value of the time they expended in the preparation of their Federal income tax return. Held: petitioners may not deduct the value of the time they expended in the preparation of their Federal income tax return.

Held, petitioner is not entitled to use the income averaging provisions for computing his 1976 income tax under secs. 1301-1305, I.R.C. 1954.

Held, petitioner's employment as an electrician in the construction of a power plant was not temporary and, therefore, he is not entitled… Held: petitioner's employment as an electrician in the construction of a power plant was not temporary and, therefore, he is not entitled to deduct under sec. 162(a), I.R.C. 1954, automobile expenses incurred in 1973 and 1974 for traveling daily between his residence and place of employment. McCallister v. Commissioner,70 T.C. 505 (1978).

Held, petitioner's employment as an electrician in the construction of a power plant was not temporary and, therefore, he is not entitled to… Held: petitioner's employment as an electrician in the construction of a power plant was not temporary and, therefore, he is not entitled to deduct under sec. 162(a), I.R.C. 1954, automobile expenses incurred in 1974 for traveling daily between his residence and place of employment. McCallister v. Commissioner,70 T.C. 505 (1978).

Held: The allowability of various claimed business deductions determined.

Held: Understatement of income determined. Held: Understatement of income determined.

Petitioners entered into an agreement when they obtained a divorce decree, which was incorporated into the decree. Held: Under Illinois law, the payments at issue were not made in discharge of a legal obligation imposed on petitioner-husband because of the marital or family relationship.

In Jan. 1973, P accepted a position in Missouri, but his employer promised to transfer him to his home area in California within 6 to 8 months. Held: P's living expenses during 1974 were not incurred while traveling away from home and were not deductible under sec. 162(a)(2), I.R.C. 1954.

Petitioner sold insurance and collected accounts for insurance companies on a commission basis, and incurred expenses in connection with his business for which he was not reimbursed. Allowable deductions for automobile, office, and telephone expenses determined.

Held: Petitioner is liable for tax on one-half of the community income of her former husband and herself during years in which they were separated but prior to entry of a final decree of divorce. Held: Petitioner is liable for tax on one-half of the community income of her former husband and herself during years in which they were separated but prior to entry of a final decree of divorce.

Held: Satisfaction of the seller's mortgage note out of the proceeds of a sale reported on the installment basis must be included as a payment in the year of sale.

Held: The deductibility of various business expenses and itemized deductions determined.

Petitioner filed a return but did not fill it out, claiming that his earnings were not statutory dollars and objecting to portions of the return based on the 1st, 4th, 5th, 7th, 8th, 9th, 10th, 13th,… Held: Respondent's deficiency determination sustained. Held, further: Imposition of the penalties of sections 6651(a)(1) and 6653(a), I.R.C. 1954, upheld. Hatfield v. Commissioner,68 T.C. 895 (1977) followed .

On the same day, decedent executed her will and a deed conveying to her daughter her residence and surrounding acreage. Held: the execution of the deed was a transfer made in contemplation of death and is included in decedent's gross estate under section 2035, I.R.C. 1954.

Held, Ps had income in 1974 in the amount determined by the Commissioner. Held: Ps had income in 1974 in the amount determined by the Commissioner.

Held, no part of the distributions made by the corporate petitioner to or on behalf of its sole shareholder represented a payment of dividends.

Petitioner understated his gross business receipts for his taxable year 1969. Held: from all the evidence estimate made of petitioner's increased labor expenses.

Petitioners C. F. Malanka and Sons, Inc., C. Salvatore & Sons, Inc., the Catt Corp., and Mal Bros., a partnership of the Malanga brothers,… Held: The Joint Venture checks to Kantor Supply Co. were illegal kickbacks to public officials not deductible by the Joint Venture. The Joint Venturers were aware of the purpose for the checks and underreported their distributive shares of the Joint Venture income on their own tax returns due to fraud with intent to evade tax. 2.

Petitioner sold a parcel of land overburdened with loam to a developer. He retained the right to require that any loam removed from the land by the developer be deposited on neighboring land he still owned. Loam was deposited on the land and petitioner immediately embarked on a course of action lasting 10 years in which he marketed the loam. Held: petitioner was in the business of selling loam. Held further: petitioner is not entitled to deplete his interest in the loam.

Held: Respondent's determination of amounts allowable to petitioners as deductions for expenses of meals and lodgings away from home during 1973 and 1974, approved. Held: Respondent's determination of amounts allowable to petitioners as deductions for expenses of meals and lodgings away from home during 1973 and 1974, approved.

Held: Respondent's deficiency determinations sustained. Petitioner failed to carry his burden to show respondent erred. Held,further: Fraud proved. Held: Respondent's deficiency determinations sustained. Petitioner failed to carry his burden to show respondent erred. Held,further: Fraud proved.

Held, respondent's determinations as to the useful life of various components of a shopping center sustained. Held: respondent's determinations as to the useful life of various components of a shopping center sustained.

Petitioners terminated refuse disposal operations on their space for dumping. Thereafter, they held the space for dumping for sale. Held: they are not entitled to either an abandonment or retirement loss deduction.

Held, prior sec. 1402(h) (now sec. 1402(g)) is constitutional. Held further, petitioner is liable for self-employment tax under sec. 1401. Held: prior sec. 1402(h) (now sec. 1402(g)) is constitutional. Held further, petitioner is liable for self-employment tax under sec. 1401.

Held, the amount and deductibility of various home office expenses determined. Held: the amount and deductibility of various home office expenses determined. Heldfurther, on the facts of this case, petitioner's sister-in-law considered a foster child for purposes of sections 151 (e) and 152, I.R.C. 1954.

Held, petitioner may not deduct amounts she expended for living expenses while residing in Georgia be cause she was not away from home. Held: petitioner may not deduct amounts she expended for living expenses while residing in Georgia be cause she was not away from home.

Petitioner worked in the New York, New Jersey and Pennsylvania area for 12 years, through 1972. He maintained a residence in Lynbrook, New York and one in Auburndale, Florida. He had a Florida driver's license was registered to vote in Florida and had his car registered there. Held, petitioner's tax home for 1972 was Lynbrook, New York. Heldfurther, the deductibility of other items determined.

Petitioner Harold was president and sole shareholder of Sentinal. During 1972 and 1973, Sentinal paid cash meals allowance of $2,980 and $2,948, respectively, to Harold. Held: Cash meals allowance paid by Sentinal to Harold is not excludable from petitioners' gross income under section 119. Commissioner v. Kowalski,434 U.S. 77 (1977).

1. Held: Payments made by Gurley to Mrs. Thoda referred to in settlement agreement as installment payments of a specific sum of alimony in solido were… Held: Payments made by Gurley to Mrs. Thoda referred to in settlement agreement as installment payments of a specific sum of alimony in solido were in the nature of a property settlement rather than alimony and were not taxable to Mrs. Thoda under sec. 71, I.R.C. 1954, nor deductible by Gurley under sec. 215, I.R.C. 1954. 2.

Petitioner was married but living separately from her husband. Held, amounts she received as temporary alimony pursuant to a court order are includable in her gross income. Held: amounts she received as temporary alimony pursuant to a court order are includable in her gross income. Held further, petitioner's proper filing status was married filing separately. Held further, the Court lacks jurisdiction with respect to petitioner's taxable year 1974.

Held, the Commissioner's deficiency determination sustained. Held: the Commissioner's deficiency determination sustained. Held, further, P is liable for additions to tax under secs. 6651(a) 6653(a), and 6654(a), I.R.C. 1954, in the amounts determined by the Commissioner.

(1) The Commissioner recomputed H and W's income for 1968 and 1969 using the bank deposits method. Held: such bank deposits were made from a cash hoard accumulated by H in prior years and did not represent unreported income of H and W during the years in issue.

Held, petitioner's employment as an electrician in the construction of a power plant was not temporary and, therefore, he is not entitled to deduct under sec. 162(a), I.R.C. 1954, automobile expenses incurred in 1974 for traveling daily between his residence and place of employment. McCallister v. Commissioner,70 T.C. 505 (1978).

Held, petitioner has failed to carry his burden of proving his employment as a laborer in the construction of a power plant was temporary, therefore, he is not entitled… Held: petitioner has failed to carry his burden of proving his employment as a laborer in the construction of a power plant was temporary, therefore, he is not entitled to deduct under sec. 162(a), I.R.C. 1954, automobile expenses incurred in 1974 for traveling between his residence and place of employment.

Held, petitioners may deduct interest of $796.13 in 1974. Held further, petitioners may deduct medical expenses of $893.23 in that year. Held: petitioners may deduct interest of $796.13 in 1974. Held further, petitioners may deduct medical expenses of $893.23 in that year.

H and W were divorced in 1972. In 1974, both claimed dependency deductions for their two children, who were in the custody of W. In that year, H furnished over $1,200 in support of the children. Held, the Commissioner clearly established that W provided more for the support of such children than did H. Sec. 152(e)(2)(B), I.R.C. 1954.

Held, the Commissioner's deficiency determination is sustained.

Petitioners incorporated Slainte and were its only shareholders. Held: petitioners have failed to prove the corporation timely elected subchapter S status.

Held, amount of deductions to which petitioners are entitled determined. Held further, negligence penalty unwarranted. Held: amount of deductions to which petitioners are entitled determined. Held further, negligence penalty unwarranted.

Petitioners purchased farmland in 1951, but did not work or live on the land until 1969. Held: petitioners are not entitled to deduct farm expenses in excess of those allowed by section 183, I.R.C. 1954; held further, petitioners are not allowed an investment credit on certain farm equipment; held further, this Court is without jurisdiction to award attorney's fees to petitioners.

Held, petitioner had additional, unreported income in 1973. Held further, the resultant underpayment of tax for that year was due to negligence or intentional disregard of rules and regulations. Held: petitioner had additional, unreported income in 1973. Held further, the resultant underpayment of tax for that year was due to negligence or intentional disregard of rules and regulations.

Held: petitioner's receipt of a portion of the sale proceeds from certain real estate determined to be received in respect of services, taxable as ordinary income. Held: petitioner's receipt of a portion of the sale proceeds from certain real estate determined to be received in respect of services, taxable as ordinary income. Held further, petitioner liable for sec. 6653(a) addition to tax for intentional disregard of rules and regulations.

Held, Ps failed to carry their burden of proving that the Commissioner erred in his determination of the fair market value of property… Held: Ps failed to carry their burden of proving that the Commissioner erred in his determination of the fair market value of property donated to a charitable organization.Held, further, Ps are liable for the additions to tax under sec. 6653(a), I.R.C. 1954, because part of the underpayments of tax for each of the years in issue was due to…

Held: 1. Petitioner William's proferred testimony of his recollection of what his wife told him about her working conditions is inadmissable hearsay. 2. Office in home expense for teacher not allowed. 3. Portion of rent paid for a duplex apartment in which petitioners lived attributable to space used by William to study and work on thesis while a post-graduate student at Harvard Law School not allowed.

Held, petitioner failed to carry his burden of showing that he was away from home or that his employment was temporary, therefore, he is not entitled to an employee business expense deduction under… Held: petitioner failed to carry his burden of showing that he was away from home or that his employment was temporary, therefore, he is not entitled to an employee business expense deduction under sec. 162(a)(2), I.R.C. 1954, for meals and lodging in 1975.

Held, petitioner's employment as a laborer in the construction of a power plant was not temporary and, therefore, he is not entitled to deduct under sec. 162(a), I.R.C. 1954, automobile expenses incurred in 1975 for traveling daily between his residence and place of employment. McCallister v. Commissioner,70 T.C. 505 (1978).

Held, petitioner's employment as a boilermaker in the construction of a power plant was not temporary and, therefore, he is not entitled to deduct… Held: petitioner's employment as a boilermaker in the construction of a power plant was not temporary and, therefore, he is not entitled to deduct under sec. 162(a), I.R.C. 1954, automobile expenses incurred in 1974 for traveling daily between his residence and place of employment. McCallister v. Commissioner,70 T.C. 505 (1978).

Held, respondent's determination that a portion of the stipend petitioner received was compensation for services he performed for the benefit of the University and, therefore, was not excludable… Held: respondent's determination that a portion of the stipend petitioner received was compensation for services he performed for the benefit of the University and, therefore, was not excludable under sec. 117, I.R.C. 1954, is sustained.

Held, petitioner was not engaged in drag racing for profit; therefore, he is entitled to deductions for racing expenses only to the extent of income derived from such activity as provided in sec.… Held: petitioner was not engaged in drag racing for profit; therefore, he is entitled to deductions for racing expenses only to the extent of income derived from such activity as provided in sec. 183, I.R.C. 1954.

Held, (1) petitioners are not engaged in the leasing of their motor home for profit as provided by sec. 183, I.R.C. 1954; (2) petitioners' automobile expense and meals and lodging deductions… Held: petitioners are not engaged in the leasing of their motor home for profit as provided by sec. 183, I.R.C. 1954; (2) petitioners' automobile expense and meals and lodging deductions determined; (3) sec. 6653(a), I.R.C. 1954, penalty not imposed.

Held: Respondent's disallowance of deductions for theft of tools, casualty losses for two automobiles, and cost of new tools sustained, except for $900 of the cost of new tools found to have a useful… Held: Respondent's disallowance of deductions for theft of tools, casualty losses for two automobiles, and cost of new tools sustained, except for $900 of the cost of new tools found to have a useful life of less than 1 year.

Held, (1) Respondent's determination that petitioner failed to report income sustained; (2) section 6651(a) addition to tax imposed. Held: Respondent's determination that petitioner failed to report income sustained; (2) section 6651(a) addition to tax imposed.

Held, (1) petitioner failed to substantiate meal expense deductions; (2) petitioner's automobile expense deductions determined; (3) depreciation deduction for travel trailer denied. Held: petitioner failed to substantiate meal expense deductions; (2) petitioner's automobile expense deductions determined; (3) depreciation deduction for travel trailer denied.

The controlling shareholder of a corporation had an informal oral agreement with the corporation to receive a bonus and monthly salary. Held: the amount of bonus was not definitely ascertained so there was no constructive receipt. Held,further, in the absence of any written memoranda, corporate minutes, resolutions, or a crediting upon the corporation's books of the amount of salary, the salary was not constructively received.

Held, Ps are entitled to carryover to 1969 a long-term capital loss because they have carried their burden of proving: (1) That they… Held: Ps are entitled to carryover to 1969 a long-term capital loss because they have carried their burden of proving: (1) That they purchased 8 parcels of property in Shanghai, China, between 1942 and 1945; (2) how much they paid for 6 of such properties; (3) that they retained ownership and control of such properties at the time they…

Held: Petitioners failed to prove that respondent erred in determining useful lives of component assets, part of apartment rental property owned by a partnership in which petitioners own an interest. Held: Petitioners failed to prove that respondent erred in determining useful lives of component assets, part of apartment rental property owned by a partnership in which petitioners own an interest.

Held, amount of business use of petitioners' automobile determined. Held: amount of business use of petitioners' automobile determined.

Before liquidating Brookridge adopted a plan of complete liquidation under sec. 337, I.R.C. 1954. Brookridge's primary assets consisted of an inventory of real property divided into lots. Held: sale of inventory assets failed to qualify under sec. 337. Held further:Brookridge's liquidation failed to qualify under sec. 337 since contract to sell does not constitute a distribution of property subject to said contract.

Petitioners Lemler and Smith were a dentist and doctor, respectively, who enjoyed flying and were qualified as pilots. Held: Elhon's demonstrator activity was a separate activity for purposes of section 183, I.R.C. 1954, and was not an activity engaged in for profit. Consequently, petitioners are not entitled to deduct on their personal returns for the years 1971-1975 the losses incurred by Elhon in conducting the demonstrator activity.

Petitioner's employment as a tenured associate professor at Southern Illinois University was terminated in 1974. Held: the amount received is includable in petitioner's gross income and is not excludable under sec. 104(a)(2), I.R.C. 1954, as damages received * * * on account of personal injuries * * *.

P is the manager of a boutique selling exclusively women's clothes and accessories designed by Yves St. Laurent, and she was expected to purchase and wear such apparel while at work. Held: Ps are entitled to deduct the cost of purchasing and maintaining such apparel as an ordinary and necessary business expense. Secs. 162(a), 262, I.R.C. 1954.

Held: Petitioner's payment of $6,669.95 to Joseph C. Essa constituted $2,169.95 as boot in an exchange of cars with Essa, and $4,500 as a rebate to the purchaser of… Held: Petitioner's payment of $6,669.95 to Joseph C. Essa constituted $2,169.95 as boot in an exchange of cars with Essa, and $4,500 as a rebate to the purchaser of the inventory of petitioner's business. Accordingly, petitioner is entitled to reduce the gain on the sale of his business and inventory by $4,500.

Respondent disallowed dependency exemptions for Tammy, Todd and Timothy Combs on both Betty C. Combs' and George Combs' Federal income tax returns for 1974. In addition, respondent disallowed $1,838 of a $2,080 deduction for child care expenses taken on Betty C. Combs' 1974 Federal income tax return. Held: Betty C. Combs is entitled to dependency exemptions for Tammy, Todd and Timothy Combs for 1974. Heldfurther: Betty C. Combs is entitled to a child care expense deduction for 1974 in the amount of $562.

Petitioners' partnership owned the Hotel King Cotton in downtown Memphis, Tenn. Held: petitioners' partnership was entitled to an abandonment loss deduction on the building in 1973 and petitioners were entitled to deduct their distributive shares of the loss.

Petitioners were ordered by the Department of Building and Safety in August of 1973 to vacate rental apartments by Cot. 1, 1973, and make designated repairs within 3 months or demolish the buildings. Held: petitioners are not entitled to either an abandonment or retirement loss deduction for 1973.

Petitioners had been notified in two prior decisions by this Court that the loss of anticipated earnings of their deceased daughter was not deductible. Held, that continuing to take the unauthorized deduction was an intentional disregard of the rules and regulations within the meaning of sec. 6653(a), I.R.C. 1954.

Held, 1975 amendment to section 241(d) increasing income limitation from $18,000 to $35,000 applicable to taxable years beginning after March 29, 1975 and hence $18,000 limitation applied to… Held: 1975 amendment to section 241(d) increasing income limitation from $18,000 to $35,000 applicable to taxable years beginning after March 29, 1975 and hence $18,000 limitation applied to petitioners' 1975 calendar year.

Petitioners owned a wooden boat. In February of 1976 it was discovered that petitioners' boat had been substantially destroyed by dry rot. Petitioners claimed a casualty loss deduction. Held: petitioners failed to show that the loss of their boat occurred suddenly within the meaning of section 165(c)(3), I.R.C. 1954.

Held: (1) H and W filed joint Federal income tax returns for 1963 and 1964. (2) Except for $200.00 in 1962 and $468.41 in 1965, H and W did not underreport their taxable income from an illegal casino. Held: H and W filed joint Federal income tax returns for 1963 and 1964. (2) Except for $200.00 in 1962 and $468.41 in 1965, H and W did not underreport their taxable income from an illegal casino.

Petitioner was a resident at Johns Hopkins Hospital and received a grant from the National Institute of Mental Health. Held: the payments are not excludable scholarship or fellowship grants. Section 117 (a), I.R.C. 1954 .

Held, payments to petitioner's exwife on mobile home were part of a property settlement and not alimony. Held: payments to petitioner's exwife on mobile home were part of a property settlement and not alimony.

P, an airline pilot, used his private automobile to drive between his residence in San Diego and his place of employment in Los Angeles, a distance of 126 miles. Held: P failed to prove that he would not have used his private automobile but for the necessity of transporting his job-related materials; therefore, the expenses of such trips represented nondeductible personal commuting expenses.