Volume 40 — Tax Court Memorandum

Petitioner was separated from his wife. A Pennsylvania Court of Common Pleas entered an order providing petitioner pay alimony pendente lite, child support, and preliminary counsel fees and expenses. Held: an order to make payments of alimony pendente lite is not a decree of maintenance. Held further, petitioner is married for the purpose of sec. 1, I.R.C. 1954.

Held: Amounts received from settlement of a lawsuit represented claims for lost wages and are not excludable from income. Held: Amounts received from settlement of a lawsuit represented claims for lost wages and are not excludable from income.

Petitioner and her spouse filed their 1969 and 1970 joint income tax returns on April 18, 1973. Records supporting the business deductions claimed on the return were stolen. Held: on the facts of this case, the travel expenses of petitioner's spouse that were incurred wile away from home were non-deductible personal living expenses since his employment was for an indefinite period of time.

Held: Respondent's determination of tip income upheld. Held: Respondent's determination of tip income upheld.

Held: The money earned by petitoner and applied by his employer toward the purchase of his tractor in order to enable him to retain his position with his employer is includable in taxable income. Held: The money earned by petitoner and applied by his employer toward the purchase of his tractor in order to enable him to retain his position with his employer is includable in taxable income. The cost of the tractor is a nondeductible capital expenditure.

Petitioners held all of the outstanding stock in PSCS when those shares became worthless in 1973. Held: Petitioners had a basis of $15,000 in the 1,500 shares in PSCS that originally were shares in PBS; petitioners had a basis of $1,000 in the 100 shares in PSCS that were received for the shares in SCS which had been acquired for cash; and petitioners had no basis in the 350 shares in PSCS that were received for the shares in SCS which…

Held: The provisions of the Tax Reform Act of 1976 retroactively increasing the minimum tax are not unconstitutional. Held: The provisions of the Tax Reform Act of 1976 retroactively increasing the minimum tax are not unconstitutional. Buttke v. Commissioner, 72 T.C. 677 (1979), on appeal (CA8 Oct. 15, 1979), followed.

P and C, farming businesses, owned rice acreage allotments throughout 1974. Held: the rice allotments owned by P and C were not worthless in 1974, and hence, they are not entitled to a deduction for the loss in value of such allotments.

Held, ownership of 90 percent of the stock in a wholly owned small business corporation by petitioners' six minor children was not bona fide and lacked economic reality during the years at issue. Held: ownership of 90 percent of the stock in a wholly owned small business corporation by petitioners' six minor children was not bona fide and lacked economic reality during the years at issue.

(1) A owned all the stock of X and two-thirds of the stock of Y. B, while married to A's daughter and living in California, a community property State, was issued the remainder of the stock of Y in consideration for his agreeing to work for X. Held, since under California law, A's daughter owner one-half of B's stock in Y, and since under sec. 1563(e)(6), I.R.C. 1954, such one-half of the stock is attributed to A, A is considered to own at least 80 percent of the stock in both X and Y; thus, X and Y were members of a controlled group of corporations within the meaning of sec. 1563(a), I.R.C. 1954. (2) Held, X was not entitled to a deduction for auto expenses, and Y was not entitled to a deduction for a payment to A's daughter, since there was no testimony or other evidence offered to explain or substantiate the deductions. (3) Held, X was not entitled to deductions for travel and gift expenses, since it failed to substantiate the expenses as required by sec. 274(d), I.R.C. 1954.

In 1970 petitioner Anthony G. Pizzarelli, a 50 percent shareholder in Ulster Tool and Die Corp., diverted corporate checks for his personal benefit. Held: the diverted proceeds were ordinary income, and not loans, to petitioners in 1970. Held further, the funds received from Ulster-Hurley Properties were constructive dividends in the years of receipt and not loans. Held further, sec. 6653(b) addition to tax for fraudulent underpayment imposed for taxable year 1970.

Ps had an interest in drilling partnerships which, on Dec. 29, 1972, entered into contracts with the parent corporation of their general partners for the drilling of… Held: Ps are entitled to the deduction for the intangible drilling costs in 1972 under sec. 1.461-1(a)(2), Income Tax Regs., since the Commissioner conceded that the drilling contracts were made in that year and that such contracts were sufficient to establish the fact of the liability and the amount thereof.

Held, petitioner's debentures constituted bona fide debt, entitling it to interest deductions under section 163; held further,… Held: petitioner's debentures constituted bona fide debt, entitling it to interest deductions under section 163; held further, petitioner realized gain in 1966 from the redemption of its stock in Atlas Organization, Inc., in 1966 upon the determination of the fair market value of assets it received; held further, petitioner subject to the…

Held, petitioners are entitled to deduct gambling losses in amount determined by the Court. Held: petitioners are entitled to deduct gambling losses in amount determined by the Court.

Held, expenses incurred by petitioner Lavon R. Bullock for meals, lodgings, and transportation are not deductible under sec. 162(a), I.R.C. 1954, as travel expenses incurred while away from home. Held: expenses incurred by petitioner Lavon R. Bullock for meals, lodgings, and transportation are not deductible under sec. 162(a), I.R.C. 1954, as travel expenses incurred while away from home.

Held, the deductibility of certain expenditures under secs. 162(a) and 274(d), I.R.C. 1954, determined; held, further, the deductibility of certain itemized deductions determined; held, further, P is… Held: the deductibility of certain expenditures under secs. 162(a) and 274(d), I.R.C. 1954, determined; held, further, the deductibility of certain itemized deductions determined; held, further, P is liable for the self-employment tax under sec. 1401, I.R.C. 1954.

Held: Petitioner is entitled to relief as an innocent spouse under section 6013(e), I.R.C. 1954. Held: Petitioner is entitled to relief as an innocent spouse under section 6013(e), I.R.C. 1954.

During 1976, petitioner-husband, a truck driver, maintained a log-book which recorded his hours, mileage, and route.Petitioners also recorded contributions to their church on a wall calendar. Held: petitioner-husband's log-book is insufficient to meet the requirements of section 274(d). Held further, amount of petitioners' charitable deduction determined.

Held, petitioners not entitled to employee business expense deductions in 1975 and 1976 for meals and lodging while away from home in excess of amounts allowed by respondent for failure of… Held: petitioners not entitled to employee business expense deductions in 1975 and 1976 for meals and lodging while away from home in excess of amounts allowed by respondent for failure of substantiation.

Petitioner, a tenured University professor, received a lump sum settlement for a release of all claims against his former employer. Held, the amount received is includable in petitioner's gross income and is not excludable under sec. 104(a)(2).

(1) At trial, Ps filed a motion for summary judgment contending that the deficiencies determined by the Commissioner ought not to be sustained since IRS was guilty of improper conduct toward Ps and since the Fifth Amendment to the U.S. Constitution permitted Ps to refuse to report their incomes.Ps offered no evidence to refute the deficiencies. Held, Ps' motion denied since Ps failed to prove misconduct, since such misconduct, if proved, would not affect the deficiencies, and since the Fifth Amendment does not permit Ps to refuse to report their incomes. Held, further, the deficiencies are sustained since Ps failed to carry their burden of disproving them. (2) Held, Ps were each liable for an addition to tax under sec. 6651(a), I.R.C. 1954, since they filed no returns for 1976 and showed no reasonable cause for their failure to file. (3) Held, Ps were each liable for an addition to tax under sec. 6653(a), I.R.C. 1954, since they failed to show that their underpayments of tax were not due to negligence or to intentional disregard of rules and regulations. (4) Held, Ps were each liable for an addition to tax under sec. 6654, I.R.C. 1954, since they failed to show that they did not underpay their estimated tax.

Ps filed a motion to dismiss for lack of jurisdiction on the ground that under the U.S. Constitution, the Congress was not permitted to entrust to this Court jurisdiction over matters arising under… Held: motion denied since by invoking the jurisdiction of this Court, Ps waived the right to assert that such jurisdiction was unconstitutionally entrusted to the Court, and since, in any event, there is no merit to Ps' constitutional argument.

Held: Conveyance of a residence in fee simple by petitioner to his former spouse pursuant to a divorce decree is a lump sum payment not subject to any contingencies and accordingly the value of the residence is not deductible under section 215, I.R.C. 1954.

(1) Held, P did not qualify for the tax rates applicable to married persons filing joint returns since he and his spouse did not file joint returns. Held: P did not qualify for the tax rates applicable to married persons filing joint returns since he and his spouse did not file joint returns. (2) Held, P was entitled to a personal exemption for his wife since she had no income and was not the dependent of another taxpayer.

Held, petitioner was not away from home within the meaning of section 162(a)(2), I.R.C. 1954, and, therefore expenses incurred for travel, meals and lodging with respect to his employment are… Held: petitioner was not away from home within the meaning of section 162(a)(2), I.R.C. 1954, and, therefore expenses incurred for travel, meals and lodging with respect to his employment are nondeductible.

Held: (1) Petitioners, as guarantors of corporate notes, are not entitled to interest deductions for amounts allegedly paid by them in satisfaction of the corporate debt. (2) Petitioners' deduction for payment of State income taxes denied for failure to properly substantiate the expenditures.

Held, P failed to establish that he was entitled to a deduction for wagering losses in excess of that allowed by the Commissioner. Held: P failed to establish that he was entitled to a deduction for wagering losses in excess of that allowed by the Commissioner.

(1) Held, it has long been settled that income includes compensation for personal services. Held, further, the deficiencies determined by the Commissioner are sustained since Ps offered no evidence to refute them. (2) Held, Ps are each liable for additions to tax under sec. 6651(a), I.R.C. 1954, since their failure to file tax returns was not due to reasonable cause. (3) Held, Ps are each liable for additions to tax under sec. 6653(a), I.R.C. 1954, since their underpayments of tax were due to negligence. (4) Held, Ps are each liable for additions to tax under sec. 6654, I.R.C. 1954, since they failed to pay estimated tax.

Held, interest and miscellaneous income includable in petitioner's gross income for 1975. Held: interest and miscellaneous income includable in petitioner's gross income for 1975.

Procedure.--The petitioner died after having timely filed his petition. Held, under Texas law his heirs may represent the estate in the absence of formal probate or administration. Held: under Texas law his heirs may represent the estate in the absence of formal probate or administration.

Petitioner did not establish that in signing the joint income tax return for 1973 she did not know of, and had no reason to know of, the omission of income received by her husband from the sale of stolen metal. Sec. 6013(e), I.R.C. 1954, is therefore not available to relieve petitioner from liability for the tax attributable to such omitted income.

Three properties owned by petitioner were damaged by a storm. Estimates of the cost to repair the damage were prepared. Petitioner was compensated by insurance for part of the damage; the insurance adjuster used the repair estimates in determining the insurance recovery. All the damage, except that to one-half of a damaged roof, was repaired. Petitioner did some of the repairs, and paid his son to do some. Petitioner's contracting corporation was paid to do the remaining repairs. Held: amounts of losses in excess of insurance recoveries determined under section 1.165-7(a)(2), Income Tax Regs.

Held, stipend received by petitioner during 1973 not excludable from gross income as a fellowship grant pursuant to section 117; held further, petitioner not entitled to a deduction for real estate… Held: stipend received by petitioner during 1973 not excludable from gross income as a fellowship grant pursuant to section 117; held further, petitioner not entitled to a deduction for real estate taxes and rental losses in excess of the amount allowed by respondent.

Held: Petitioner was not engaged in her writing and publishing activities for profit during the years 1970 through 1973. Accordingly, the losses sustained from such activities are not deductible. Held further: Petitioner is not entitled to deductions for medical expenses and tax return preparation expenses.

Held, petitioners failed to carry their burden of proving a petition, bearing no postmark and received by the Court 95 days after the mailing of the notice of deficiency, was timely filed. Held: petitioners failed to carry their burden of proving a petition, bearing no postmark and received by the Court 95 days after the mailing of the notice of deficiency, was timely filed.

By Court order dated August 23, 1978 respondent's request for admission was deemed admitted pursuant to Rule 90(f), Tax Court Rules of Practice and Procedure.Held, facts deemed admitted are conclusively established. Held further, the only proper method for seeking withdrawal or modification of deemed admitted facts is in the form of a motion, Rule 90(e). Held further, amount of unreported income and additions to tax determined.

During the years 1971 through 1975 petitioner Frederic Enterline misappropriated funds from his employer. Petitioners failed to report to the misappropriated funds on their joint income tax returns. Held: petitioner Frederic Enterline is liable for the addition to tax under sec. 6653(b), I.R.C. 1954. Held further, petitioner Virginia Enterline qualifies as an innocent spouse. Sec. 6013(e).

Petitioners' wholly owned corporation did not make a valid subchapter S election during the Year at issue and, therefore, petitioners are not entitled to deduct the losses claimed on their individual returns.

Held, payment of petitioner's Federal income tax liabilities by two corporations of which petitioner was a stockholder constituted a constructive dividend to petitioner. Held: payment of petitioner's Federal income tax liabilities by two corporations of which petitioner was a stockholder constituted a constructive dividend to petitioner.

Held, payments in the amount of $3,000 made in 1974 by petitioner James Bushman to his former wife, petitioner Catherine M. Colucci, are periodic payments within the meaning of section 71(a)(1),… Held: payments in the amount of $3,000 made in 1974 by petitioner James Bushman to his former wife, petitioner Catherine M. Colucci, are periodic payments within the meaning of section 71(a)(1), and, therefore, includable in her gross income and deductible by him under section 215.

Held, petitioner sustained a business loss in 1974, fully deductible in that year. Held: petitioner sustained a business loss in 1974, fully deductible in that year.

Held, petitioner not entitled to deduct amounts contributed to a Pension Fund by his employers.

Held: Allowability of claimed business expense deductions and other items, appropriateness of self-employment tax as well as negligence and delinquency penalties, determined. Held: Allowability of claimed business expense deductions and other items, appropriateness of self-employment tax as well as negligence and delinquency penalties, determined.

Held, amounts paid by petitioners' wholly owned corporation to petitioners' son and the son's wholly owned corporation constituted constructive dividends to petitioners. Held: amounts paid by petitioners' wholly owned corporation to petitioners' son and the son's wholly owned corporation constituted constructive dividends to petitioners.

Held, petitioners in their capacity as partners are not entitled to casualty loss deductions in excess of amounts allowed by respondent.

Held: Respondent challenged reasonableness of salary of petitioner in docket No. 2253-78 and its corollary deduction by petitioner in docket No. 2254-78. Held: Respondent challenged reasonableness of salary of petitioner in docket No. 2253-78 and its corollary deduction by petitioner in docket No. 2254-78. Salary reasonable and hence distributions by corporate petitioner deductible.

Held: Expenditures by a partnership in which one of the petitioners was a limited partner were part of the consideration paid by the partnership for stock and were not deductible as… Held: Expenditures by a partnership in which one of the petitioners was a limited partner were part of the consideration paid by the partnership for stock and were not deductible as business expenses under sec. 162 or as exploration expenses under sec. 617, Internal Revenue Code of 1954.

Petitioners invested in a corporation. Shortly thereafter they sold their stock in the corporation to the other shareholder in exchange for notes. Held: Petitioners suffered a $30,000 nonbusiness bad debt loss in 1974.

Petitioner applied for and received tentatives refunds of income taxes paid in 1972 and 1973 as a result of alleged net operating loss… Held: the sources and applications of funds method is an acceptable method of income reconstruction, was applicable to the instant case and was properly applied by respondent to petitioner's 1975 taxable year; heldfurther, petitioner is not entitled to depreciation deduction in 1975 which would have reduced her adjusted basis in the…

Petitioner, French O. Whitten, Jr., was a Circuit Court Judge of the 30th Judicial Circuit of Alabama from January of 1965 until January of 1971, and as such had jurisdiction to grant divorces. Held: French O. Whitten, Jr., received fees for signing divorce decrees during 1967-70 which he did not report on his income tax returns for those years. Amounts to be determined under Rule 155, Tax court Rules of Practice and Procedure. 2.

Held, petitioner acted as a mere conduit in making kickback payments to public officials on behalf of Shaara Construction, Inc., during the years 1967, 1968 and 1969. Held: petitioner acted as a mere conduit in making kickback payments to public officials on behalf of Shaara Construction, Inc., during the years 1967, 1968 and 1969. Therefore, amounts received by petitioner from that corporation during those years did not constitute gross income.

Held: Petitioners have not proven that original use of a condominium unit commenced with them for purposes of the credit under section 44 for purchase of a new principal residence.

Held: Based upon all the facts presented, Compensation paid by petitioner's wholly owned corporation to petitioner was unreasonable. Held further: Reasonable compensation determined. Held: Based upon all the facts presented, Compensation paid by petitioner's wholly owned corporation to petitioner was unreasonable. Held further: Reasonable compensation determined.

Petitioner operated a business as a sole proprietor. He systematically understated his business gross receipts by approximately 12 percent for each of the three taxable years before us. Held: On the record before us we conclude that petitioner's systematic understatement of income was the product of mala fides exclusion of amounts from gross receipts with the purpose of evading income taxes he knew to be due. Held further: fraud penalty properly imposed.

Petitioner filed tax returns for 1976 and 1977 on which she gave no information with respect to her taxable income but instead entered the word object or ** on each line of the returns. Held: petitioner's motion to dismiss for lack of jurisdiction denied. Held,further, respondent's motion for summary judgmnent granted.

Petitioners lived in Portland, Oregon. From April 12, 1972, to July 1975, petitioner-husband was employed by a subcontractor at the construction site of a nuclear power plant at Rainier, Oregon, 45… Held: Petitioner-husband's employment at the Rainier job site was not temporary during 1972 and 1973; his daily transportation expenses are not deductible under section 162(a).

Petitioner-husband was an outside salesman for an automotive parts seller whose only office was in Rochester, New York. Petitioners' residence was in Corning, New York. Held: Petitioners are not entitled to deduct petitioner-husband's expenses as traveling expenses while away from home in the pursuit of a trade or business. Sec. 162(a)(2), I.R.C. 1954. (2) Petitioner-husband's deductible automobile expenses determined. Sec. 162(a), I.R.C. 1954.

Held, failure to file timely estate tax return not due to reasonable cause.

Although this Court adheres to its views in Fairfax Auto Parts of No. Va., Inc. v. Commissioner, 65 T.C. 798 (1976), revd. and remanded 548 F. 2d 501 (4th Cir. 1977), cert. denied 434 U.S. 904… Held: petitioners are brother-sister corporations and entitled to only a single surtax exemption, sec. 1561, Internal Revenue Code.

Petitioner contended that he filed a form 4361 by which he claimed exemption from the self-employment tax as a minister. Held: Based upon all the facts petitioner has failed to show that he mailed the form 4361.

Held: Fair market value of land determined.

Petitioner signed a separation agreement and received monthly payments for her support. Held: petitioner did not sign the agreement under duress or because of fraudulent representations by her exhusband. Therefore, such payments constitute alimony.

Held, petitioners are not entitled to a loss deduction for 1973. The loss, if any, occurred in 1971. Held: petitioners are not entitled to a loss deduction for 1973. The loss, if any, occurred in 1971. Held,further, petitioners are entitled to a theft loss deduction in an amount determined by the Court.

Held: Petitioners may not deduct the basis in buildings which were demolished after leased to a third-party where the lease permitted demolition and both parties contemplated… Held: Petitioners may not deduct the basis in buildings which were demolished after leased to a third-party where the lease permitted demolition and both parties contemplated that the lessee might demolish the buildings. Rather, the basis in the buildings must be amortized over the term of the lease.

Petitioner challenged the self-employment tax as being unconstitutional because it exempts ministers and certain other groups but does not exempt him. Held: The self-employment tax is constitutional. Held: The self-employment tax is constitutional.

In an earlier opinion to which this opinion is a supplement (see 71 T.C. 141) we found that decedent's disclaimer of an interest in a trust was a transfer for estate tax purposes. Held: based upon all the facts and circumstances of the case the transfer was not one in contemplation of death.

Held, petitioner is not entitled to a deduction under sec. 215, I.R.C. 1954, for payments made to his wife pursuant to an oral agreement; held… Held: petitioner is not entitled to a deduction under sec. 215, I.R.C. 1954, for payments made to his wife pursuant to an oral agreement; held further, petitioner is not entitled to file as a head of household for 1976; held further, petitioner is not entitled to a theft loss deduction in excess of the amount allowed by respondent.

In October of 1975, a rental property owned by petitioner was totally destroyed by fire. The property was insured and petitioner notified the insurance company of the loss. Held: since petitioner had a reasonable prospect of recovery for the loss as of the end of 1975, no deductible casualty loss was sustained in 1975, within the concept of section 165(a), I.R.C. 1954.

Petitioner is not entitled to a deduction under section 162(a) for expenses incurred in attending law school.

Held, petitioner is not entitled to a deduction for the use of a room in her residence as an office because such room was not exclusively used for the purpose of carrying on a trade or business. Held: petitioner is not entitled to a deduction for the use of a room in her residence as an office because such room was not exclusively used for the purpose of carrying on a trade or business. Sec. 280A, I.R.C. 1954.

Petitioner was married but living separately from her husband during the years at issue. Held, petitioner is not entitled to file her tax returns and compute her tax as an unmarried individual. Held further,section 6653(a), I.R.C. 1954, penalty not imposed.

Held, petitioners failed to substantiate meals and lodging expenses in excess of amounts allowed by respondent. Held: petitioners failed to substantiate meals and lodging expenses in excess of amounts allowed by respondent.

Held, losses incurred by petitioners from commodity futures transactions in 1974 are deductible as capital losses; held further, petitioners are not entitled to elect the additional first-year allowance for depreciation on delinquently filed income tax returns for 1973 and 1974; held further, the addition to tax for failing to timely file their 1973 and 1974 income tax returns imposed upon petitioners.

In 1965, decedent and his wife opened up a joint savings account, the funds for which were provided by decedent. Held: The above-described transfer was not made in contemplation of decedent's death. Sec. 2035, I.R.C. 1954(pre-1977).

Held, stipend received by petitioner during 1975 and 1976 not excludable from gross income as a scholarship or fellowship grant under section 117, I.R.C. 1954. Held: stipend received by petitioner during 1975 and 1976 not excludable from gross income as a scholarship or fellowship grant under section 117, I.R.C. 1954.

Held, petitioner's war tax deduction denied. Held: petitioner's war tax deduction denied.

Held, certain poultry structures are integrally related to the production of eggs entitling petitioners to an investment credit pursuant to sec. 38, I.R.C. 1954. Satrum v. Commissioner,62 T.C. 413 (1974) followed; held further, an egg-processing structure is not integrally related to the production of eggs and therefore is a building disqualified for an investment credit by the provisions of sec. 48(a)(1)(B), I.R.C. 1954.

Petitioner, Dr. Madden, loaned money to a friend to meet the expenses of his two automobile dealerships, and later acquired controlling… Held: Madden's advances were contributions to the capital of the two corporations and his losses are not deductible as business losses, business bad debts or business expenses; held further, petitioners realized a capital gain on the sale of real estate in 1971; held further, additions to tax under sections 6651(a)(1) and (2), and section…

Petitioners Mr. and Mrs. Ratana were born in Thailand and the Philippines, respectively. Both were resident aliens in the United States. Held: All of Mr. Ratana's income was subject to tax under sec. 61, I.R.C. 1954. Held further: Mrs. Ratana qualifies as an innocent spouse under sec. 6013(e).

Petitioner received advance of money from his solely owned corporation. Held: The advances were intended as loans and not dividends.

Petitioner borrowed money from Surfside on a shortward nonrecourse note. He then applied the proceeds toward the purchase of unimproved real estate from a third party. Held: petitioner's loss was a capital loss, subject to the limitations provided in sections 1211 and 1212, I.R.C. 1954. Freeland v. Commissioner, 74 T.C. (No. 70) (August 5, 1980) followed.

Held: A full-time law student is not "gainfully employed" for purposes of section 214, Internal Revenue Code 1954.

Held, the amount of various expenses petitioner is entitled to deduct on his 1975 return determined.

Held, petitioners are not entitled to deductions under sec. 170, I.R.C. 1954, for contributions made to the Association of Churches of the Tolerants. Held: petitioners are not entitled to deductions under sec. 170, I.R.C. 1954, for contributions made to the Association of Churches of the Tolerants.

Held, deductions for farm and home losses and education expenses denied. Held: deductions for farm and home losses and education expenses denied.

Petitioner-husband participated in two taxqualified employees' plans and was the sole owner of the sponsoring employer. Held: The March 3, 1975, transfers were bona fide loans, and not distributions by the trusts (sec. 402(a)(1)). Held further: Respondent failed to prove that the debts arising from the loans were discharged in 1975 (sec. 61(a)(12)).

Held, petitioner has not satisfied section 274(d) with regard to certain travel expenses incurred while away from home.

From May 1972 until March 1974 petitioner was an escaped prisoner who engaged in marijuana smuggling. Held: the source of petitioner's funds was taxable income and not loans from friends and relatives. Held further, petitioner is liable for the additions to tax under section 6651(a)(1), section 6653(a), and section 6654(a).

Held: Amount of deductions to which petitioner is entitled determined. Held: Amount of deductions to which petitioner is entitled determined.

Held, petitioner failed to substantiate meal expense deductions; held further, petitioner is not entitled to a theft loss deduction pursuant to section 165, I.R.C. 1954. Held: petitioner failed to substantiate meal expense deductions; held further, petitioner is not entitled to a theft loss deduction pursuant to section 165, I.R.C. 1954.

Held, amount of deduction for away from home travel expenses determined. Held: amount of deduction for away from home travel expenses determined.

Held: Petitioner, an active (even though his interest not vested) participant in a sec. 401 qualified pension plan, liable for sec. 4973 excise tax.

Held, amount of petitioners' income for 1973, 1974, and 1975 determined. Held further, petitioners are liable for the addition to tax under section 6651(a) for 1973 and 1974 and for the addition to tax under section 6653(a) for 1973, 1974, and 1975.

Held: Petitioners' consent to extend the statute of limitations was not secured under duress. Held: Petitioners' consent to extend the statute of limitations was not secured under duress. Heldfurther: Respondent's determination on the substantive issues herein is sustained in view of petitioners' failure in their petition to assign error to respondent's adjustments and the failure to allege facts supporting their objections thereto.

Petitioners, officers and shareholders of Parks, Inc., received interest-free loans from the corporation. Held: Loans of money, interest-free, do not create taxable income to the borrowers. Dean v. Commissioner, 35 T.C. 1083 (1961) and Greenspun v. Commissioner, 72 T.C. 931 (1979) followed.

Respondent determined petitioners' 1975 income from a grocery store/service station under the source and application of funds method. Held, petitioners did not establish the existence of cash on hand in excess of the amount determined by respondent. Petitioners are liable for the addition to tax under section 6653(a).

1. Petitioner entered into a contractual arrangement with Certain-Teed for development of certain processes patented by petitioner. Held: petitioner failed to prove that the $15,000 he received from Certain-Teed was consideration for transfer of all substantial rights to a patent taxable as capital gain under sec. 1235, I.R.C. 1954. 2. Petitioners' tax return for 1971 was not filed until 1977.

Held: Petitioner, Phyllis Betnar, failed to show that she is relieved of liability for deficiencies in income taxes for the years 1971, 1972 and 1973 pursuant to the innocent spouse provision of… Held: Petitioner, Phyllis Betnar, failed to show that she is relieved of liability for deficiencies in income taxes for the years 1971, 1972 and 1973 pursuant to the innocent spouse provision of I.R.C. sec. 6013(e).

Held: Certain travel, entertainment and selling expenses disallowed for lack of adequate substantiation. Held: Certain travel, entertainment and selling expenses disallowed for lack of adequate substantiation. Held further: Respondent's determination disallowing certain medical expenses sustained in view of petitioner's failure to introduce evidence in support of the claimed expenditures.

Held, petitioner's employment on a construction project was indefinite, rather than temporary, and accordingly deductions under section 162(a)(2) for away from home traveling expenses are denied. Held: petitioner's employment on a construction project was indefinite, rather than temporary, and accordingly deductions under section 162(a)(2) for away from home traveling expenses are denied.

Held: Petitioner liable for section 6651(a) and section 6653(a) additions to tax. Held: Petitioner liable for section 6651(a) and section 6653(a) additions to tax.

Held, the provision of the Tax Reform Act of 1976 making the new base and rate for the application of the minimum tax provisions retroactive to taxable years beginning after Dec. 31, 1975, is not… Held: the provision of the Tax Reform Act of 1976 making the new base and rate for the application of the minimum tax provisions retroactive to taxable years beginning after Dec. 31, 1975, is not unconstitutional. Buttke v. Commissioner,72 T.C. 677 (1979), affd.

Petitioner understated income for fiscal years ended April 30, 1973 and 1974. Petitioner's major shareholders were Arlington Phillips and Ethel Purdie. Held: Petitioner is liable for the sec. 6653(b) I.R.C. 1954, addition to tax.

Due to a reduction in work force, petitioner was laid off by United Airlines at its Salt Lake City operation and was offered a job at its San Francisco location. Held: San Francisco employment was indefinite within Court interpretation of sec. 162(a)(2) and hence his expenses nondeductible. Sales tax deduction determined.

Held: (1) Petitioner is not entitled to a dependency exemption for his mother for failure to provide over one-half of her support. (2) Petitioner's use of head of household rates denied. Held: Petitioner is not entitled to a dependency exemption for his mother for failure to provide over one-half of her support. (2) Petitioner's use of head of household rates denied.

Respondent, utilizing the source and applications of funds and cash expenditure methods of recomputing income, determied that petitioners underreported income. Held: Respondent's determination is sustained. Held Further: Petitioners are liable for sec. 6651(a) and sec. 6653(a) additions to tax.

Petitioners, Navajo Indians, claimed as a medical expense deduction the cost of sings performed by Navajo medicine men. Held:sec. 213 medical expense determined. Held Further: sec. 6651(a) and sec. 6653(a) additions to tax sustained.

Respondent determined the taxable income from petitioner's accounting practice, by use of the bank deposits method, for 1970, 1971, 1972, and 1973. Held: amount of income from petitioner's accounting practice determined. Heldfurther, petitioner is liable for the additions to tax under sections 6651(a) and 6653(a) for 1970, 1971, 1972, and the addition to tax under section 6654 for 1970, 1971, and 1972.

Held: (1) Petitioners are not entitled to a depreciation deduction on an automobile owned by them but used exclusively by their corporation. Held: Petitioners are not entitled to a depreciation deduction on an automobile owned by them but used exclusively by their corporation. (2) Deduction for certain claimed business expenses denied because the expenses were incurred while investigating the potential success of an unlaunched business venture.

Petitioner, Ramon, and his former wife, Jean, entered into an agreement which was adopted and approved by a divorce decree entered in 1968 under the terms of which petitioner was to pay Jean a debt… Held: the payments in issue were not periodic payments in the nature of support or alimony and were not taxable to Jean under sec. 71, I.R.C. 1954, and hence were not deductible by petitioners under sec. 215.

(1) In 1968, P sold Q all the stock of B. P continued to serve as the president of B, and in 1973, he misappropriated funds of B. He claimed that Q had defrauded him in the 1968 sale and that he was entitled to compensation for the fraud. Subsequently, P sued to recover his stock, and B sued to recover the funds. In 1977, the litigation was settled; P relinquished his claim to the stock and was permitted to retain the funds. Held, since P did not receive the misappropriated funds as the result of a sale or exchange and since he received the funds in 1973 without the recognition of an obligation to repay and without restriction as to their disposition, such funds were taxable to him as ordinary income in 1973. (2) Held, P is not taxable on imputed interest as a result of the receipt of an interest-free loan in 1973. Greenspun v. Commissioner, 72 T.C. 931 (1979), followed. (3) Held, Ps are liable for an addition to tax under sec. 6651(a), I.R.C. 1954, since they failed to show that the untimely filing of their tax return was due to reasonable cause. (4) Held, Ps are liable for an addition to tax under sec. 6653(a), I.R.C. 1954, since they failed to show that their underpayment of tax was not due to negligence.

During 1975 and 1976 petitioner received $31,904.91 and $26,231.68 in compensation. Petitioner did not file returns for those years. Held: petitioner's compensation is taxable. Held further, petitioner is not entitled to compensatory damages, punitive damages, or a jury trial. Held further, a part of petitioner's 1975 and 1976 underpayments of tax was due to fraud.

Petitioner was employed as an electronic supervisor in a medical center. Petitioner's responsibilities included maintaining the center's electronic equipment. Held: petitioner's expenses of obtaining a junior college degree in business management are not deductible. Held further, petitioner is entitled to deduct a portion of his home telephone expense.

Petitioner was married and domiciled in Louisiana. She filed her income tax return as married filing separately. Held: Under Louisiana community property law, petitioner is required to report one-half of the total income of the marital community and is entitled to one-half of the total allowable deductions and credits.

Held, Ps are not entitled to a war crimes deduction on their 1975 Federal income tax return. Held: Ps are not entitled to a war crimes deduction on their 1975 Federal income tax return.