Volume 48 — Tax Court Memorandum

Held, petitioner's claimed disability income exclusion is not allowable because his adjusted gross income exceeded $15,000 and under sec. 105(d)(3),… Held: petitioner's claimed disability income exclusion is not allowable because his adjusted gross income exceeded $15,000 and under sec. 105(d)(3), I.R.C. 1954, the claimed exclusion is reduced to zero by income exceeding $15,000. Held further, petitioner is liable for the addition to tax for negligence under sec. 6653(a).

Held, petitioner has not substantiated amounts claimed to have been paid for general sales taxes in excess of the amount allowed by the Commissioner. Held: petitioner has not substantiated amounts claimed to have been paid for general sales taxes in excess of the amount allowed by the Commissioner.

P, an airline pilot, was required by Federal regulation and by his employer to maintain, revise, and study various flight manuals, charts, and maps. Held: P is not entitled to a deduction for the expenses attributable to his home office, since it was not his principal place of business. Sec. 280A(c)(1), I.R.C. 1954. Held, further, P's claimed deduction for additional telephone expenses was not properly before the Court.

Held: Amount of unreported income determined; fraud addition not found for one taxpayer and found for other. Held: Amount of unreported income determined; fraud addition not found for one taxpayer and found for other.

Held, P's Motion to Strike Allegations in R's Answer in a declaratory judgment action is denied, where the allegations of R's answer have a clear basis in the administrative record filed with the… Held: P's Motion to Strike Allegations in R's Answer in a declaratory judgment action is denied, where the allegations of R's answer have a clear basis in the administrative record filed with the Court.

Held: Respondent failed to prove fraud by clear and convincing evidence. Assessment and collection of deficiencies in tax and additions to tax is barred by the statute of limitations. Held: Respondent failed to prove fraud by clear and convincing evidence. Assessment and collection of deficiencies in tax and additions to tax is barred by the statute of limitations.

L, president and some shareholder of petitioner J.S.M., purchased 78 paintings and statues from petitioner S. Held, S underreported by $63,500 the amount of gross receipts he… Held: S underreported by $63,500 the amount of gross receipts he received from the sales. Held further, S is not liable for the addition to tax for fraud. Held further, S is liable for the addition to tax for failure to file a required return because neither he nor his wife signed their Form 1040.

Held, the filing of a nonfraudulent amended return subsequent to the filing of a fraudulent return does not commence the three-year statute of limitations under… Held: the filing of a nonfraudulent amended return subsequent to the filing of a fraudulent return does not commence the three-year statute of limitations under section 6501(a). 1Unless otherwise indicated, all section references are to the Internal Revenue Code of 1954, as in effect during the years in issue.

Held: Petitioner failed to prove that he is entitled to a deduction for a loss by theft. Held: Petitioner failed to prove that he is entitled to a deduction for a loss by theft.

Petitioner filed a document which purported to be a Form 1040 but which was altered in such a manner as to point out petitioner's frivolous position that wages are not subject to income tax. Petitioner instituted this proceeding claiming that wages are not subject to income tax. Held, respondent's motion to dismiss for petitioner's failure properly to prosecute is granted with respect to the deficiency and the addition to tax under section 6653(a). Held further, the document filed by petitioner is not a return and petitioner is liable for the addition to tax under 6651(a)(1). Held further, damages are awarded to the United States in the amount of $500 under section 6673.

P Corp. acquired the stock of S Corp., a corporation with substantial unused net operating loss carryovers and other built in tax… Held: P Corp's. advances to S Corp. constituted equity rather than debt for Federal tax purposes; held further, S Corp. was solvent on the date it was liquidated and the liquidation therefore qualified as a valid sec. 332/ 334(b)(1), I.R.C., 1954, liquidation; held further, P Corp's. successor is not precluded by sec. 381(a), I.R.C., 1954,…

Held: Loss of accrual basis partnership determined. Held: Loss of accrual basis partnership determined.

Held: Income from grantor trusts taxed to grantor-petitioners.

Held, petitioner received unreported gross income from the sale of silver during 1968 and 1970. Held: petitioner received unreported gross income from the sale of silver during 1968 and 1970. Held further, the resultant underpayments of tax were due to fraud and, accordingly, petitioner is liable for an addition to tax under sec. 6653(b), I.R.C. 1954, for each of the years in issue.

P was the president, sole director, and controlling shareholder of D. In 1976, D leased an airplane for use in its business. During 1976, D also made its airplane available to certain of its employees for their personal use. P was the only person to use the airplane in 1976 for personal purposes, and his personal use constituted a substantial portion of the total use of the airplane during 1976. Held: (1) D is entitled to deduct expenses attributable to the personal use of the airplane by P since personal use of the airplane constitutes additional compensation rather than dividend income to P; and (2) amount of additional compensation to P determined.

Held: Wages received by petitioner-husband in exchange for his services are income, subject to taxation. Sec. 61(a)(1), I.R.C. 1954. Held: Wages received by petitioner-husband in exchange for his services are income, subject to taxation. Sec. 61(a)(1), I.R.C. 1954.

Held: (1) H and W may not deduct the cost of premiums paid for flight officer's disability insurance. (2) Reimbursed flight-training expenses are not deductible. Held: H and W may not deduct the cost of premiums paid for flight officer's disability insurance. (2) Reimbursed flight-training expenses are not deductible. Manocchio v. Commissioner,78 T.C. 989 (1982), affd. 710 F.2d 1400 (9th Cir. 1983), followed.

In 1970, petitioners transferred at least $75,000 to petitioner-wife's father and a business associate of the father to invest in a cargo ship. Held: Petitioners have failed to prove that they did not have a reasonable prospect of recovering their investment in the ship by the end of 1974, the only year in issue. Consequently, petitioners are not entitled to a 1974 deduction on account of theft, bad debt, worthless stock, or transaction entered into for profit.

S, a corporation, primarily sold products manufactured by M, a manufacturing corporation. Held: S is required to maintain inventories and to use the accrual method of accounting since its sales of the products were a material income-producing factor for S, and S has failed to prove that it did not have title to such products.

Petitioner failed to file tax returns for the taxable years 1973 through 1976 and failed to answer respondent's request for admissions or to appear at trial. Held: respondent's oral motion to dismiss for lack of prosecution with respect to the underlying deficiencies and the sec. 6654, I.R.C. 1954, additions to tax is granted.

Held, a U.S. Postal Service Certificate of Mailing, Form 3817, bearing a timely U.S. postmark stamp date, being neither a receipt for… Held: a U.S. Postal Service Certificate of Mailing, Form 3817, bearing a timely U.S. postmark stamp date, being neither a receipt for certified mail nor proof of registered mailing, is impermissible to prove date of mailing of petition, where envelope in which petition is received by the Court bears a U.S. postmark stamp date that is one…

Petitioner filed his petition in this action 114 days after the notice of deficiency was mailed to him at the Baltimore City Jail where he was incarcerated pending posting the requisite collateral for bail, but 89 days after the notice of deficiency was mailed to a residence address known to respondent. Held, the Baltimore City Jail, a temporary address of no definite duration, was not petitioner's last known address. Held further, the 90-day period for filing a petition with this Court under sec. 6213(a), I.R.C. 1954, as amended, commenced on the date the notice of deficiency was mailed to the residence address. Held further, respondent's motion to dismiss for lack of jurisdiction is denied.

In 1975, Ps paid $1,250 for materials to establish a family trust. During 1976, Ps paid interest on mortgages on two parcels of real property. Held: Ps may not deduct the amount paid for the family trust materials. Held,further, the amount of deductible interest determined.

Held, advanced royalties paid in 1977 by petitioner, a cash basis taxpayer, were not deductible because no coal was ever produced in 1977 and the royalties were not paid pursuant to a valid minimum… Held: advanced royalties paid in 1977 by petitioner, a cash basis taxpayer, were not deductible because no coal was ever produced in 1977 and the royalties were not paid pursuant to a valid minimum royalty provision as provided in section 1.612-3(b)(3), Income Tax Regs.

Petitioners were physicians and partners in an accrual basis partnership of physicians (the Group) under contract to perform medical services for the subscribing members of the Kaiser Foundation… Held: 1964 was not the proper year for accrual of the income in question since there was no contingency of sufficient magnitude present to prevent fixation of the right to receive such income. Thus, the proper year for accrual of the income in question was prior to 1964.

Held: (1) H and W have failed to properly prosecute their case. Held: H and W have failed to properly prosecute their case. (2) Requests for admissions which have been deemed admitted are sufficient to satisfy the Commissioner's burden of proof with respect to the fraud additions. Charles W. Jeglikowski, for the respondent.

Held: (1) H and W have failed to properly prosecute their case. Held: H and W have failed to properly prosecute their case. (2) Affirmative allegations in the Commissioner's amended answer which have been deemed admitted, as well as requests for admission which have been deemed admitted, are sufficient to satisfy the Commissioner's burden of proof with respect to the fraud additions.

Petitioner, a cash basis, calendar year taxpayer, is the sole income beneficiary of a trust administered on a fiscal year basis, with fiscal year ending the last day of February. Held: petitioner is required to include in income for his tax year 1979 the income of the trust for the trust's year ended February 28, 1979.

Petitioner appearing pro se offered no evidence to substantiate disallowed deductions Held: petitioner failed to carry his burden of proof. Held: petitioner failed to carry his burden of proof.

Held,Postal Service Form 3877, Acceptance of Registered, Insured, C.O.D. and Certified Mail, introduced by respondent which indicates that a statutory notice was mailed by respondent to petitioner and the date thereof, is sufficient, in light of the absence of any contradictory evidence, to prove conclusively that such notice was mailed on the date specified therein. Held further, private meter postmark is disregarded in favor of the postmark made by the United States Postal Service. Thus, respondent's Motion to Dismiss for Lack of Jurisdiction is granted since petition was mailed on the 92nd day following the mailing of the notice of deficiency.

Ps' attorney mailed their petition to this Court by First Class mail in an envelope bearing a partially illegible private postage mater stamp date… Held: where petition was not delivered by U.S. mail petitioners may not rely on the provisions of sec. 7502, I.R.C. 1954, and its regulations; petition must meet the requirements of sec. 6213(a). Held further, since petition failed to satisfy those requirements, respondent's Motion to Dismiss for Lack of Jurisdiction is granted.

During the taxable year at issue, D was self-employed as a real estate broker. Held, D is not entitled to deduct $14,020 of earnings as non-taxable receipts. Held: D is not entitled to deduct $14,020 of earnings as non-taxable receipts. Held further, D is liable for self-employment tax. Held further, interest and business deductions determined. Held further, D is liable for the additions to tax for negligence and failure to timely file a return.

Petitioners were partners in a general partnership, Power Leasing Associates (PLA), which they formed to purchase truck-tractors which would be used to haul freight for a freight transportation company (GTL) in which they were officers and stock-holders. The truck-tractor units were leased to employee-drivers of GTL whe were required to lease the equipment, as owner-operators, to GTL. The purpose of the plan was to convert the Teamster drivers of GTL to owner-operators.The useful life of the truck-tractor units was five years.The term of the leases from PLA to the drivers was 48 months; however, many of the leases were terminated in less than 2-1/2 years. Held: PLA, and hence its partners, was not entitled to an investment credit on the truck-tractor units because, as required by sec. 46(e)(3)(B), IRC 1954, the terms of the leases were not less than 50 percent of the useful lives of the property leased.

Held: Petitioners failed to prove that they intended to repay purported loans from certain lenders; hence, amounts of purported loans are treated… Held: Petitioners failed to prove that they intended to repay purported loans from certain lenders; hence, amounts of purported loans are treated as income realized in 1974 and 1975; respondent failed to prove that petitioners did not intend to repay purported loans from another lender; petitioners failed to demonstrate error in…

Held, respondent's reconstruction of toke income received by petitioner while employed as a blackjack dealer in 1972 and 1973 sustained. Held: respondent's reconstruction of toke income received by petitioner while employed as a blackjack dealer in 1972 and 1973 sustained. Held further, because petitioner failed to maintain records of his toke income received during the years at issue, respondent's determinations of additions to tax under sec. 6653(a), I.R.C., sustained.

Petitioner sent Forms 1040 to respondent, which provided no information as to petitioner's income, deductions, and credits. Held: The Forms 1040 do not constitute tax returns. As a result, (1) the statute of limitations does not bar assessment of deficiencies; (2) petitioner's and his wife's attempted elections of joint returns are ineffective; and (3) petitioner is liable for additions to tax for failure to file a timely return.

Held: Petitioners failed to prove that they made any charitable contributions to Universal Life Church, Inc., of Modesto, California or that any contributions they may have made… Held: Petitioners failed to prove that they made any charitable contributions to Universal Life Church, Inc., of Modesto, California or that any contributions they may have made to their own Universal Life Church congregation qualified as charitable contributions under sec. 170(c)(2), I.R.C. 1954.

Held: Fair market value of 2,480 acre farm-ranch in Perkins County, South Dakota, owned by decedent at the time of his death, redetermined.

Petitioner was convicted of filing false tax returns for the years 1966 through 1970. Held, petitioner is collaterally estopped from denying fraud for those years notwithstanding newly discovered evidence and claims of constitutional violations in the criminal case, and additions to tax under sec. 6653(b), I.R.C., 1954, are sustained for those years. Respondent failed, however, to prove fraud by clear and convincing evidence for the years 1962 through 1965. Different results for different years were reconcilable. Petitioner's claim of incompetence to form the requisite fraudulent intent is rejected.

Corporation failed to file returns and sought to use its net operating loss carrybacks and/or carryback credits to absorb the tax or underpayment and avoid the delinquency or negligence additions to… Held: additions to tax are not affected by carrybacks. Prior case law followed.

By amended answer, respondent asserted additions to tax under secs. 6651(a)(1) and 6653(a), I.R.C. 1954, for each of the years in issue. Held: Respondent has the burden of proof as to each of these additions. On the record in this case, respondent has failed to carry this burden, as to each addition to tax for each of the years in issue.

Petitioner failed to file income tax returns for 1979 and 1980. In December of each of these years he filed false Forms W-4 with his employer. Held: Addition to tax under section 6653 (b), I.R.C. 1954 (fraud), imposed for 1980, the only year for which it was asserted. (2) Deficiencies are determined, and other additions to tax imposed, for 1979 and 1980 in accordance with the notice of deficiency.

Held, petitioner's motion for reconsideration of the Court's findings of fact and opinion in Cooperstein v. Commissioner,T.C. Memo. 1984-290, or request for a further trial denied. Held: petitioner's motion for reconsideration of the Court's findings of fact and opinion in Cooperstein v. Commissioner,T.C. Memo. 1984-290, or request for a further trial denied. Held further, respondent's motion for reconsideration of the Court's opinion granted.

Petitioner earned income as an employee for each of the years in issue. He understood his obligations to pay income taxes, to be subjected to withholding, and to file tax returns. Held: Addition to tax under section 6653(b), I.R.C. 1954 (fraud), is imposed for each of the years in issue. (2) Amounts of deficiencies are determined. (3) Addition to tax under section 6654, I.R.C. 1954 (underpayment of estimated tax), is determined for 1980.

Ps claimed deductions for a casualty loss and for professional supplies on their income tax return for 1977. Held: Ps failed to prove that they are entitled to a casualty loss deduction in any amount for 1977. (2) Ps failed to prove that they are entitled to any deduction for professional supplies for 1977. (3) Ps' deductible miscellaneous business expenses for 1978 determined. (4) Ps' deductible charitable contributions for 1978 determined.

R and F acquired certain rights to lithographs in 1977, for which they claimed investment credits under sections 38 and 48, I.R.C. 1954, for… Held: since the lithograph activities of R and F were not engaged in for profit as required by section 183(a), I.R.C. 1954, and did not constitute a trade or business, nor were the lithographs held for the production of income, as required under section 167(a)(1) or (2), the claimed investment credits and depreciation deductions are…

From 1971 through 1983, petitioners engaged in horse-racing and horse-breeding activities. Held: petitioners engaged in the horse-racing and horse-breeding activities during 1979 and 1980 with the actual and honest objective of making a profit.

P moved under Rule 52, Tax Court Rules of Practice and Procedure, for an order striking a portion R's answer. Held: R has properly pleaded allegations of fact in his answer. Held further, P's motion is denied.

Held, although petitioner had to carry her books to and from work, her commuting expenses were solely personal and not incurred in carrying on any trade or business. Held: although petitioner had to carry her books to and from work, her commuting expenses were solely personal and not incurred in carrying on any trade or business. Thus, secs. 162(a) and 167, I.R.C. 1954, are not applicable and no deduction for her automobile expenses is allowed.

T realized a loss when real estate he had purchased in a joint venture was sold at a foreclosure sale. Held: since the joint venture did not hold the real estate primarily for sale to customers in the ordinary course of a trade or business, T incurred a capital loss upon its sale. Held further, T properly reported a corporate distribution of money as dividend income in 1978.

Held: Petitioners did not realize any net income in 1979 from participation in marijuana smuggling venture.

P, a professional inventor of industrial designs, entered into 82 separate design contracts with 53 different clients during the years 1977 through 1974. P created unique patentable designs for his clients and was paid flat fees for those designs. Held, P's design contracts transferred to his clients all substantial rights to patents within the meaning of sec. 1235(a), I.R.C. 1954. Held further, since P was an independent contractor, not an employee, the "hired to invent" rule does not apply. Downs v. Commissioner,49 T.C. 533 (1968), and Blum v. Commissioner,11 T.C. 101 (1948), affd. 183 F. 2d 281 (3d Cir. 1950), distinguished. Held further, on the facts of this case, the payments P received from his clients were consideration for the transfer of his rights in his patentable designs, not compensation for his services, so the payments qualify for capital gains treatment under sec. 1235, I.R.C. 1954.

Dr. M, an orthopedic surgeon, was the sole shareholder of PC, his professional corporation. In 1971, he as an individual and four others formed G.A.B. Corp. to operate a hospital. Held: PC may not deduct the judgment payments and legal fees as ordinary and necessary business expenses. Sec. 162, I.R.C. 1954. (2) Dr. M received constructive dividends by reason of PC's payments of the bank judgment and of the $4,500 in legal fees attributable to the bank lawsuit.

During 1973, 1974, and 1975, P engaged in transactions involving investments in silver and made large bank deposits.P filed returns for 1973 and 1974 but did not file a return for 1975. The Commissioner, using the bank deposits method, determined that P had unreported income during each of the years in issue. Held: (1) P has failed to prove that he did not have unreported income during the years in issue as determined by the Commissioner in his revised bank deposits analysis. (2) P is liable for the addition to tax for negligence under sec. 6653(a), I.R.C. 1954, for 1973, 1974, and 1975. (3) P is liable for the addition to tax for failure to timely file an income tax return under sec. 6651(a), I.R.C. 1954, for 1975. (4) P is liable for the addition to tax for failure to pay estimated tax under sec. 6654, I.R.C. 1954, for 1975.

Petitioner's ex-husband failed to make court-ordered support payments for their minor child for 1977. The debt that arose was worthless at the end of 1977. Held: Petitioner is not entitled to a bad debt deduction because she has no basis in the debt. Swenson v. Commissioner,43 T.C. 897 (1965), followed.

Held: (1) H and W are liable for the addition to tax for fraud under sec. 6653(b), I.R.C. 1954, for 1975. Held: H and W are liable for the addition to tax for fraud under sec. 6653(b), I.R.C. 1954, for 1975. (2) The statute of limitations does not bar the assessment of the deficiency and the addition to tax under sec. 6653(b), I.R.C. 1954, for 1975.

Respondent determined deficiencies in income taxes and additions to tax under sections 6653(b) and 6654(a), I.R.C. 1954. In his answer, respondent asserted additions to tax under sections 6651(a)(1) and 6653(a), I.R.C. 1954. At trial, the Court granted respondent's motion to dismiss as to the deficiencies for failure properly to prosecute. Held: (1) Respondent has the burden of proof as to the additions to tax under sections 6651(a)(1), 6653(a), and 6653(b), I.R.C. 1954. On the record in the instant case, respondent has failed to carry this burden, as to each of these additions to tax for each of the years in issue. (2) Petitioner has failed to carry his burden of proof as to the addition to tax under section 6654(a).

Held, petitioners failed to report as income certain deposits made to their savings account and to their Canadian account in 1974, 1975, and 1976. Held further, petitioners failed to report as income interest earned on funds held in their Canadian account in 1974, 1975, 1976, and 1977. Held further, the resultant underpayments of tax in 1974, 1975, 1976, and 1977 were due to fraud and, accordingly, petitioners are liable for additions to tax under sec. 6653(b), I.R.C. 154, for each of the years in issue. Held further, petitioners' claimed deductions for automobile expenses and telephone expenses for 1974, 1975, and 1976 are disallowed in part.

Held, payment by corporation to shareholders pursuant to stock purchase agreement did not relieve remaining shareholder of binding obligation to purchase the… Held: payment by corporation to shareholders pursuant to stock purchase agreement did not relieve remaining shareholder of binding obligation to purchase the stock, and thus did not constitute constructive dividend to him. Held further, deduction by corporation of interest paid pursuant to purchase of stock upheld.

Properties were transferred from taxpayers R and A in 1976. By late 1976, petitioner, a corporation owned by the son of R and A, held title to all those properties. Respondent thereafter determined deficiencies against the transferors. Held, petitioner is liable as a transferee for the income taxes due from R and A for the taxable years 1972 through 1975.

Ps seek to withdraw their petition to the Tax Court without prejudice. Held, the Tax Court does not have the authority to permit Ps to withdraw their petition without prejudice. Held: the Tax Court does not have the authority to permit Ps to withdraw their petition without prejudice. Held further, Ps's motion is denied.

Petitioner was a limited partner in Cumberland, which was a limited partnership formed on Oct. 27, 1976, to lease and mine coal property in West Virginia. On Oct. 28, 1976, Crescent, which was controlled by the general partners of Cumberland, subleased certain coal mining rights from Black Rock and agreed to pay an advanced royalty of $2,700,000, payable $1,200,000 in cash and $1,500,000 by a nonrecourse note.

Petitioner-wife's ex-husband did not make any court-ordered support payments for their minor children in 1978. The debt that arose was worthless at the end of 1978. Held: Petitioners are not entitled to a bad debt deduction because they have no basis in the debt. Swenson v. Commissioner,43 T.C. 897 (1965), followed; Golsen v. Commissioner,54 T.C. 742 (1970), affd. 445 F.2d 985 (CA10 1971), inapplicable.

Respondent disallowed petitioners' claimed deduction in 1973 and 1974 of alleged prepaid interest expense incurred in financing purchases of spot silver (a so-called cash and carry tax shelter) on… Held: deduction disallowed because transaction entered into solely to get an interest deduction and petitioners failed to prove that interest payments were actually paid. Petitioners presented no evidence that interest was actually paid in 1973 or 1974.

Respondent disallowed petitioners' claimed deductions in 1975 and 1976 for interest and short-term capital losses allegedly incurred in connection with their purchases of silver. Held: the transactions in question were shams, designed solely for the purpose of achieving interest deductions, short-term capital losses, and the conversion of ordinary income into capital gains. Therefore, petitioners' interest deductions and short-term capital losses are disallowed.

On December 21, 1978, P purchased a 20 percent interest in a number of computers; on the same day he leased the computers to C, which in turn subleased the computers to others.P claimed a 1978… Held: The computers were placed in service by P on December 21, 1978. Held further: The failure to file the election to depreciate the computers under the class life asset depreciation range system precludes P from using the half year convention.

Held, petitioners are not entitled to deduct under section 162 or section 212, I.R.C. 1954, certain expenditures made with respect to their residence, which they previously had held as rental… Held: petitioners are not entitled to deduct under section 162 or section 212, I.R.C. 1954, certain expenditures made with respect to their residence, which they previously had held as rental property.

Ps claimed to have timely filed their petition from a 1976 deficiency notice in the same envelope as the petition in another case, in which the husband P acted as attorney. Held: the evidence does not support a finding that Ps' petition was ever sent. R sent a timely notice of deficiency for 1977 to Ps' last known address. After two delivery attempts the Post Office returned the notice stamped Unclaimed.

Ps, Chairman of the Board and president of Big Spirit Family Council, Inc. (Big Spirit) claimed deductions for cash contributions and donation deeds made to Big Spirit in 1979, which R disallowed. Held: Ps' failure constitutes a default under the circumstances of this case. R's Motion to Impose Sanctions, seeking a judgment for default under Rule 104(c)(3), Tax Court Rules of Practice and Procedure, is granted.

Held: Petitioners failed to establish that they made any charitable contributions to the Universal Life Church, Inc., of Modesto, California, or that the contributions they made to their own… Held: Petitioners failed to establish that they made any charitable contributions to the Universal Life Church, Inc., of Modesto, California, or that the contributions they made to their own Universal Life Church congregations qualified as charitable contributions.

Held: Interest paid by petitioners Benjamin and Helen Stratmore, as guarantors, on obligations of B.B. Rider Corp. is deductible as nonbusiness bad debts but is not deductible under sec. 163(a),… Held: Interest paid by petitioners Benjamin and Helen Stratmore, as guarantors, on obligations of B.B. Rider Corp. is deductible as nonbusiness bad debts but is not deductible under sec. 163(a), I.R.C. 1954.

H and W, petitioners, owned over 90 percent of the stock in petitioner P.R. Farms, a corporation engaged in the farming of fruit. H also owned 50 percent of the stock in corporation G.F.S. Petitioner corporation Palomate was equally owned by H and W's four children. Held, G.F.S. was the agent of P.R. Farms. Held further, the interest income earned by G.F.S. is taxable to P.R. Farms. Held further, the net sales proceeds of P.R. Farms' fruit reported by Palomate are taxable to P.R. Farms. Held further, P.R. Farms may not deduct $16,810 as interest paid to Palomate. Held further,P.R. Farms' deduction for rent paid to Palomate allowed. Held further, amounts paid by P.R. Farms to H's son for cost of fruit purchased are nondeductible. Held further, amount of constructive dividends from P.R. Farms to H determined. Held further, various minor adjustments determined by respondent sustained. Held further, H and W and P.R. Farms are not liable for addition to tax for negligence. Sec. 6653(a), I.R.C. 1954.

Held, petitioner does not qualify for a deduction under section 217 for moving expenses in connection with commencing new work since he failed to satisfy… Held: petitioner does not qualify for a deduction under section 217 for moving expenses in connection with commencing new work since he failed to satisfy the minimum work requirement. Held further, the adjustment for petitioner's failure to qualify for a moving expense deduction should be made to petitioner's 1979 return.

Held: (1) Petitioner's wages are includible in income; (2) Petitioner is not entitled to any deduction under sec. 162(a), I.R.C. 1954;… Held: Petitioner's wages are includible in income; (2) Petitioner is not entitled to any deduction under sec. 162(a), I.R.C. 1954; (3) Petitioner is liable for additions to tax under sec. 6653(a), I.R.C. 1954; (4) This proceeding was instituted in this Court merely for delay and, therefore, damages are awarded to the United States in the…

Held, petitioners' cattle breeding operating was an activity engaged in for profit during 1977 and the first half of 1978 and the expenses incurred in this activity are, therefore, fully deductible. Held: petitioners' cattle breeding operating was an activity engaged in for profit during 1977 and the first half of 1978 and the expenses incurred in this activity are, therefore, fully deductible.

Held, automobile expense deduction determined. Heldfurther, addition to tax for negligence sustained. Held: automobile expense deduction determined. Heldfurther, addition to tax for negligence sustained.

Held, H and W may not deduct their wages received as non-taxable receipts. Held further, W must include unemployment compensation in gross income. Held: H and W may not deduct their wages received as non-taxable receipts. Held further, W must include unemployment compensation in gross income. Held further, H and W are liable for the additions to tax for negligence and failure to timely file a return. Held further, H and W are not entitled to joint filing status.

R issued a notice of deficiency to Ps determining therein a 1978 income tax deficiency of $171,203.00. Held: because genuine issues remain respecting material facts relative to Ps' intentions to mislead R and lull R into signing the Form, as well as with respect to whether R was put on notice of the alteration by Ps' initials on the Form, Ps' Motion for Summary Judgment is denied.

Petitioners filed a motion for partial summary judgment requesting the Court to hold that certain lump-sum amounts paid by them in the form of cash and nonrecourse promissory notes constituted… Held: in view of our decision in Maddrix v. Commissioner, 83 T.C. (1984), petitioners' motion denied.

Petitioner has totally failed to produce documents and answer interrogatories despite a specific order of this Court directing him to do so. Held: petitioner's failure constitutes a default under the circumstances of this case. Respondent's Motion to Impose Sanctions, seeking a judgment for default under Rule 104(c)(3), Tax Court Rules of Practice and Procedure, is granted

P claimed medical, interest and employee business expenses on his 1980 Federal income tax return which R disallowed.R, through discovery, sought information to authenticate those claims. Held: P's failure constitutes a default under the circumstances of this case. R's Motion for Sanctions, seeking a judgment for default under Rule 104(c)(3), Tax Court Rules of Practice and Procedure, is granted.