Volume 52 — Tax Court Memorandum

H purchased a 15-minute segment of a 30-minute episode from a 130-episode television series. Held: H and W executed valid extensions for the time to assess tax, making the notice of deficiency for 1977 timely; (2) H not entitled to deductions resulting from the purchase and distribution of the segment because such activities were not entered into for profit; (3) for the same reason, H not entitled to investment tax credit for…

Held: Deductions related to the alleged purchase of cattle from Southern Star Land & Cattle Company, Inc. not allowed on the basis of Hunter v. Commissioner,T.C. Memo. 1982-126; Siegel v.… Held: Deductions related to the alleged purchase of cattle from Southern Star Land & Cattle Company, Inc. not allowed on the basis of Hunter v. Commissioner,T.C. Memo. 1982-126; Siegel v. Commissioner,T.C. Memo. 1985-441; and Jacobs v. Commissioner,T.C. Memo. 1985-609.

Held: Deduction for educational travel determined.

Petitioners owned 50 percent of the stock of a corporation incorporated in 1977 that became worthless in November 1980. Held: Petitioners stock in the corporation did not qualify as section 1244 stock. Held,Further: Loans from petitioners to the corporation and claims for uncollected rental due petitioners from the corporation, which became worthless in 1980, were non-business bad debts.

R selected P for audit based upon P's relationship to a partnership audit. Held: P's address out of the country was temporary and, without P's request designating it, the foreign address does not become P's last known address within the meaning of sec. 6212(b), I.R.C. 1954.

The Ohio Department of Liquor Control rejected petitioner-husband's application for renewal of a liquor permit on December 8, 1981. Held: Petitioners' loss was sustained upon rejection of petitioner-husband's application for renewal and not upon expiration of his period for appeal. Therefore, respondent correctly disallowed petitioners' claimed ordinary loss for 1982.

Petitioner, a guidance counselor, participated in a fashion study course that involved traveling to Israel, Egypt and Spain. Held: petitioner is not entitled to a deduction for these expenses because she failed to establish that such expenses were incurred to maintain or improve her skills as a guidance counselor.

Held, by failing to make a timely response to a Request for Admissions served upon petitioner and filed with the Court by respondent in the… Held: by failing to make a timely response to a Request for Admissions served upon petitioner and filed with the Court by respondent in the manner provided by Rule 90, Tax Court Rules of Practice and Procedure, and by showing no basis upon which the matters thereby deemed admitted under the Rule should be modified or withdrawn, and the…

Held, respondent's motion to dismiss the petition and enter a decision in the amount of deficiencies in income tax for 1977 and 1978 as determined by respondent will be granted. Held: respondent's motion to dismiss the petition and enter a decision in the amount of deficiencies in income tax for 1977 and 1978 as determined by respondent will be granted.

P's attorney requested an extension to file P's estate tax return 11 days after the due date of the return. Held: even if R abused his discretion in failing to investigate and objectively review the explanations contained in petitioner's extension request, based on the record, no good and sufficient cause existed for an extension of time to file, and accordingly the estate tax return cannot be considered as having been timely filed.

Petitioners engaged in numerous transactions in 1969 and 1970, most of which were in connection with their real estate business. Their records and books of account clearly were inadequate. Held: Respondent has failed to prove by clear and convincing evidence that either petitioner committed fraud with intent to evade tax as to either 1969 or 1970.

Respondent determined a deficiency in petitioners' income taxes for 1980 based on items passed through from S corporation's return for its year ended Mar. 31, 1980. Held: the notice of deficiency was timely. The period of limitations applicable to petitioners controls assessment of the subject deficiency.

During 1976, P formed the Greenville Church of the Commandments and purportedly transferred all of his income and assets to the church. Held: P's conduct constituted fraud within the meaning of sec. 6653(b), I.R.C. 1954.

From 1974 through 1976, petitioner-husband's primary business was as a Texaco consignee; he was also an officer, an employee, and a shareholder of three corporations -- EASI, CAN DO, and ECO-REZ. Held: Petitioner-husband's 1974 and 1975 payments on account of his guarantee of the EASI note gave rise to nonbusiness bad debts, deductible as short-term capital losses for the years in which the payments were made. Sec. 166(d), I.R.C. 1954.

P, a tax attorney, deducted his distributive share of 1977 losses of two partnerships both formed for the purpose of mining coal on… Held: Form 1902-E is not a final closing agreement within the meaning of section 7121, I.R.C. 1954; (2) the partnerships were structured to generate substantial tax benefits and neither was formed with an objective of entering into coal mining activities for profit; thus P's claimed 1977 deductions for his distributive share of partnership…

Held: Petitioner did not have a home from which he was away within the meaning of sec. 162(a)(2), I.R.C. 1954, during 1980 and 1981 while working as a contract engineer. Held: Petitioner did not have a home from which he was away within the meaning of sec. 162(a)(2), I.R.C. 1954, during 1980 and 1981 while working as a contract engineer.

P purchased equipment from the estate of her deceased father who had used the equipment in his sole proprietorship trucking business. Held: the equipment does no qualify as used section 38 property since the property was previously used by P's father. Sec. 48(c)(1) and sec. 179(d)(2)(A). Heldfurther, R's determination that Ps are liable for an addition to tax under section 6651(a)(1) is sustained.

Decedent made a gift on December 30, 1976, and claimed a specific gift tax exemption pursuant to sec. 2521, before its repeal. Held: Sec. 2010(c) requires a reduction in the unified credit against estate tax otherwise available to the estate. United States v. Hemme, U.S. ( June 3, 1986, 86-1 U.S.T.C. par. 13,671) controls.

Held: Petitioners' deduction of their pro rata share of small business corporation losses and their distributive share of partnership losses is denied to the extent that the deductions result from lost profits or are otherwise unsubstantiated. Held further, petitioners' claimed investment tax credit is denied to the extent that it is unsubstantiated.

Petitioners contributed pre-Columbian or Mayan art objects to the Duke University Museum of Art during the tax years in issue and claimed… Held: the fair market value for petitioners' charitable contributions is that determined by petitioners' expert Dammann. Held further, fees paid by petitioners for art appraisals and expenses related thereto are deductible in part under sec. 212(3). Held further, petitioners are not liable for additions to tax under sec. 6653(a).

Nevada Energy and Heating Partnership

Petitioner, a practicing psychiatrist, partially prevailed in a Tax Court case involving the deduction of expenses claimed for his own psychotherapy. Held: respondent's position in the civil proceeding was reasonable and petitioner is not entitled to an award of litigation costs.

Respondent issued notices of deficiency to petitioner with respect to his taxable years 1980 and 1981. Held: the petition filed by petitioner was not intended to raise the taxable year 1980 and respondent's motion is therefore granted. O'Neil v. Commissioner,66 T.C. 105 (1976).

The accountant who prepared petitioners' tax returns for the years in issue filed a motion for leave to file an amicus curiae brief. Held: The motion is denied. Held: The motion is denied.

P owned an interest in a coal mining venture under a sublease agreement. Held: R's motion for partial summary judgment is granted. As a matter of law, the royalties paid were not paid as the result of a minimum royalty provision within the meaning of sec. 1.612-3(b)(3), Income Tax Regs.Brown v. Commissioner, F.2d (2d Cir., Aug. 28, 1986), affg.

Held, the affirmative allegations in R's answer were deemed admitted under Rule 37(c), Tax Court Rules of Practice and Procedure. Held: the affirmative allegations in R's answer were deemed admitted under Rule 37(c), Tax Court Rules of Practice and Procedure. Such allegations deemed admitted are sufficient to sustain deficiencies for the taxable years 1974 through 1977 against petitioner.

Held: Petitioner has not shown that she is entitled to relief from liability for tax under sec. 6013(e), I.R.C. 1954, the innocent spouse provision. Held: Petitioner has not shown that she is entitled to relief from liability for tax under sec. 6013(e), I.R.C. 1954, the innocent spouse provision. Held further: Respondent has not met his burden of proving that some part of the underpayment of tax was due to fraud within the meaning of sec. 6653(b), I.R.C. 1954.

Held, matters deemed admitted and stipulated by husband-petitioner were sufficient to satisfy respondent's burden of proving fraud under… Held: matters deemed admitted and stipulated by husband-petitioner were sufficient to satisfy respondent's burden of proving fraud under section 6653(b), I.R.C. 1954. Held further, based upon stipulation between wife-petitioner and respondent, there is no deficiency in tax or addition to tax under section 6653(b) due from wife-petitioner.

Held: Petitioner Hinton R. Johnson is not precluded from litigating in this deficiency proceeding his so-called short-sale theory for 1976 by a judgment convicting him of violating sec. 7206(1),… Held: Petitioner Hinton R. Johnson is not precluded from litigating in this deficiency proceeding his so-called short-sale theory for 1976 by a judgment convicting him of violating sec. 7206(1), I.R.C. 1954, for that year.

Held, Ps failed to prove that they made any charitable contributions to Universal Life Church, Inc., of Modesto, California; Held… Held: Ps failed to prove that they made any charitable contributions to Universal Life Church, Inc., of Modesto, California; Held further, Ps are liable for additions to tax for negligence or intentional disregard of rules and regulations under sections 6653(a)(1) and (2), I.R.C. 1954; Held further, damages in the amount of $5,000 awarded…

Held, miscellaneous deductions determined; deduction for inflation disallowed; respondent's claim for addition to tax for negligence or intentional disregard of rules and regulations under section 6653(a)(1), I.R.C. 1954, sustained.

Held, the affirmative allegations in R's answer were deemed admitted under Rule 37(c), Tax Court Rules of Practice and Procedure. Held: the affirmative allegations in R's answer were deemed admitted under Rule 37(c), Tax Court Rules of Practice and Procedure. Such allegations deemed admitted are sufficient to sustain deficiencies for the taxable years 1978 through 1980 against petitioner.

The Commissioner issued notices of deficiency, which disallowed deductions claimed by Ps and made other adjustments.Held, Ps failed to sustain their burden of proof with respect to the items still in… Held: Ps failed to sustain their burden of proof with respect to the items still in dispute.

M, a firefighter, was required under a Union contract to eat his meals at the station house while on duty and to contribute to a Station Fund for the cost of the meals. Held: amounts contributed to the Station Fund are not deductible business expenses under section 162(a), I.R.C. 1954, or excludable as meals furnished for the convenience of M's employer under section 119, I.R.C. 1954. Sibla v. Commissioner,611 F.2d 1260 (9th Cir. 1980), affg.

Held, the affirmative allegations in R's answer were deemed admitted under Rule 37(c), Tax Court Rules of Practice and Procedure. Held: the affirmative allegations in R's answer were deemed admitted under Rule 37(c), Tax Court Rules of Practice and Procedure. The allegations deemed admitted are sufficient to satisfy R's burden of proving fraud under sec. 6653(b) with respect to the taxable year 1978. Doncaster v. Commissioner,77 T.C. 334 (1981), followed.

Decedent made gifts to his wife on Dec. 27, 1976, which was within 3 years of his death. Held: such gifts were substitutes for testamentary transfers, were made to avoid the estate tax, and consequently, were made in contemplation of death within the meaning of sec. 2035.

P deducted investment banker's fees under sec. 162(a), I.R.C. 1954, as amended, purportedly incurred in conjunction with the acquisition of its stock in a reverse subsidiary cash merger. Held: In these circumstances, P must fully substantiate its expenses in order to fall within sec. 162(a), I.R.C. 1954, as amended. P has not done so. Lincoln Savings does not obviate this requirement. P's Motion for Summary Judgment is denied.

Petitioner began legal separation proceedings against her former husband in 1966 and was awarded "temporary alimony and support". Petitioner was legally separated from her former husband on May 16, 1968; she was awarded (a) almost all of the marital property, (b) $250 per month for a period of 121 months, the first payment commencing on August 1, 1968, and (c) $130 per month for the support of each of petitioner's children over whom she had custody. Petitioner and her former husband were finally divorced on April 30, 1970. The divorce decree reaffirmed the legal separation judgment, but awarded petitioner an additional $15 per month for 100 months as arrearages of amounts accrued under previous orders. Held: (1) The $250-per-month payments constitute support rather than a property settlement. Also, they are periodic payments under sec. 71(c)(2), I.R.C. 1954. Accordingly, they are includible in petitioner's gross income under sec. 71(a)(1), I.R.C. 1954. (2) The $15-per-month payments are either arrearages of (a) the $250-per-month award and so includible under sec. 71(a)(1), I.R.C. 1954, or (b) the 1966 temporary alimony and support award and so includible under sec. 71(a)(3), I.R.C. 1954. During 1974, petitioner taught at the Madison Area Technical College. The College provided her with an on-campus office, to which she had access, albeit somewhat restricted. Petitioner preferred to work in her home during the evening in a room used exclusively for that purpose because (1) of the condition of her on-campus office, (2) she felt unsafe on campus after hours, and (3) her on-campus office was not available to her at some times of the day. Held: (3) Petitioner may not deduct expenses incurred for maintaining an office in her home under sec. 162(a), I.R.C. 1954, because the office was maintained for her personal convenience rather than because of the exigencies of her employment. Sec. 262, I.R.C. 1954.

Held: The waivers of the statute of limitations on assessment and collection of Ps' Federal income taxes, Forms 872 and 872-A, executed by the parties are valid. Held: The waivers of the statute of limitations on assessment and collection of Ps' Federal income taxes, Forms 872 and 872-A, executed by the parties are valid.

Held: In the light of the evidence before the Court, $50,000 received by petitioners in Sept. 1981 was a loan and not taxable income.

Petitioner, while working as an apartment building manager, bought an apartment building as a personal investment. Held: Petitioner did not hold the apartment building primarily for sale in the ordinary course of his trade or business; petitioner's gain from the sale was long-term capital gain. (2) Petitioner failed to show that any of his gain is allocable to the adjacent parcel rather than to the apartment house.

Ps embezzled funds from the wholesale drug company where P husband was employed by submitting invoices for inventory that was never received. P wife deposited checks issued by the drug company in payment for the fictitious invoices into the account of a corporation formed by Ps and used the funds to pay for personal expenses. The Commissioner determined deficiencies in tax and additions to tax for omission of income attributable to the embezzled funds. Held, (1) the issues decided in Ps' divorce proceeding have no preclusive effect in this case; (2) the embezzled funds were income to Ps upon receipt; (3) P wife does not qualify for innocent spouse status under section 6013(e), I.R.C. 1954; (4) petitioners are liable for additions to tax under section 6653(b), I.R.C. 1954; and (5) no statute of limitations applies in this case.

Held, matters deemed admitted by petitioners were sufficient to satisfy respondent's burden of proving increased deficiencies and fraud under section 6653(b), I.R.C. 1954. Held: matters deemed admitted by petitioners were sufficient to satisfy respondent's burden of proving increased deficiencies and fraud under section 6653(b), I.R.C. 1954.

Held, Ps' consistent failure to report over a three-year period substantial amounts of income derived from an embezzlement scheme involving forgery, document… Held: Ps' consistent failure to report over a three-year period substantial amounts of income derived from an embezzlement scheme involving forgery, document alteration, a fictitious entity and a special bank account constituted sufficient evidence to support fraud within the meaning of section 6653(b), I.R.C. 1954.

Ps purchased a large quantity of Government surplus bandage packages and subsequently donated them to the American Red Cross. Held: The appropriate market for determining the fair market value of the bandage packages is that market composed of institutional buyers of large quantities of bandage packages; the fair market value of such packages is determined. (2) Ps are liable for the additional interest under sec. 6621(d), I.R.C. 1954.

P's wife embezzled over $2 million from her employer. After P learned of the criminal charges against his wife and after she pleaded nolo contendere, P signed a blank Form 1040. Held: P was not an innocent spouse for the 1981 tax year.

Petitioner was in the business of preparing tax returns.It claimed various deductions as business expenses, which were disallowed by respondent in full or in part, along with other adjustments to… Held: petitioner has failed to carry its burden of proof to substantiate its claimed deductions in excess of those amounts allowed by respondent.

Petitioner applied for tax exempt status under section 501(c)(3). Held: petitioner has failed to provide sufficient information to permit the conclusion that its activities will be exclusively in furtherance of exempt purposes within the meaning of section 501(c)(3), I.R.C. 1954.

During the taxable years in issue, petitioner was employed as an ironworker at a construction site. Held: petitioner has failed to establish that during the taxable years in issue his employment was temporary, rather than indefinite or of indeterminate duration, for purposes of sec. 162, I.R.C. 1954. Accordingly, the automobile expenses attributable to his traveling to and from his place of employment are not deductible.

P consistently understated substantial amounts of income, maintained numerous savings accounts established under an alias and with false Social Security numbers and failed to produce accurate records… Held: respondent has met his burden of proving fraud under section 6653(b), I.R.C. 1954.

Life insurance policies were purchased on decedent wife's life, with premiums being paid with funds withdrawn from husband and wife's joint… Held: agency relationship existed so that payment of insurance premiums by one joint tenant, wife, constituted payment by the non-withdrawing tenant, husband. Therefore, decedent wife did not have a transferable interest in the policies within the purview of sec. 2035. Estate of Clay v. Commissioner,86 T.C. 1266 (1986), followed.

Held, P failed to substantiate claimed charitable deductions based on tithing. Held: P failed to substantiate claimed charitable deductions based on tithing.

Ps, who operated a general contracting business, reported their business income using the cash method of accounting.During 1976, 1977, and 1978, Ps deposited some business receipts into their… Held: Ps conduct with respect to such unreported income did not rise to the level of intentional wrongdoing required for finding fraud. (2) The statute of limitations bars assessment of deficiency for 1978. (3) Tax treatment of certain items of gross receipts determined.

Petitioner and her former husband filed a joint Federal income tax return for the year in question, and petitioner's former husband failed to report substantial amounts of income on the return. Held: petitioner failed to establish that she did not know, and had no reason to know, that her former husband had failed to report income on their joint Federal income tax return, and petitioner is not entitled, therefore, to the relief afforded by sec. 6013(e), I.R.C. 1954.

Held: The addition to tax for fraud not found; additions to tax for negligence and failure to file sustained. Held: The addition to tax for fraud not found; additions to tax for negligence and failure to file sustained.

Held, P, a tennis professional, is not entitled to deduct the cost of tennis clothes and tennis shoes worn at work as an ordinary and necessary business expense. Secs. 162, 262, I.R.C. 1954. Held: P, a tennis professional, is not entitled to deduct the cost of tennis clothes and tennis shoes worn at work as an ordinary and necessary business expense. Secs. 162, 262, I.R.C. 1954.

Held: Petitioner did not receive capital interests in partnerships in exchange for services during the taxable year; held further, gain on the sale of interests in oil and gas leases is… Held: Petitioner did not receive capital interests in partnerships in exchange for services during the taxable year; held further, gain on the sale of interests in oil and gas leases is recharacterized as ordinary income.

Petitioner was a general partner in a limited partnership organized in order to construct a post office facility. The partnership was dissolved at the end of the year in issue. Held: petitioners have not met their burden of proving that the special allocation was a modification agreed to by all the general partners or adopted in a manner prescribed by the partnership agreement. Sec. 761, I.R.C. 1954; Rule 142(a), Tax Court Rules of Practice and Procedure.

P filed a timely petition in response to R's statutory notice of deficiency. P alleged that the notice was not sent to P's last known address. In an attempt to support this allegation, P served a request for interrogatories and request for documents on R. R objected to P's discovery requests as irrelevant. Held P's motion to compel discovery is denied.

Held: Premium paid to Federal Deposit Insurance Corporation by bank for certain assets and assumption of certain liabilities of a failed bank is not amortizable under Banc One Corporation v.… Held: Premium paid to Federal Deposit Insurance Corporation by bank for certain assets and assumption of certain liabilities of a failed bank is not amortizable under Banc One Corporation v. Commissioner,84 T.C. 476 (1985) and collateral estoppel precludes relitigation of the issue.

In 1978 and 1979, petitioner-husband and another man owned, in equal shares, petitioner-corporation and a partnership. In 1978 and 1979, the corporation manufactured typewriter rollers under contract. One of the necessary steps in manufacturing typewriter rollers was rubber grinding. During 1978 and 1979, the corporation subcontracted the rubber grinding to the partnership, which in turn subcontracted the rubber grinding to an unrelated corporation.

P's business is the operation of a massage parlor. Held: the Commissioner's determination of P's gross income, based upon the wages of attendants furnishing sex-related services on P's premises, was arbitrary and erroneous.

Respondent determined numerous specific adjustments to petitioners' income for the years 1970 through 1976. Held: the statute of limitations bars the assessment and collection of deficiencies in income tax and additions to tax for the years 1970 and 1973.

Respondent determined deficiencies and an addition to tax for fraud for the 1976 through 1979 taxable years, based upon unreported insurance commissions of petitioner-husband. Respondent also determined that petitioner-husband is not entitled to compute his tax liability using joint return rates for the 1977 through 1979 taxable years, which returns were filed subsequent to petitioner-wife's death. Held, petitioners have failed to shift to respondent the burden of going forward or to satisfy their ultimate burden of persuasion with respect to the determined deficiencies. Held further, petitioners are liable for self-employment tax imposed upon the unreported income under sec. 1401, I.R.C. 1954. Held further, respondent has failed to establish fraud under sec. 6653(b). Held further, the statute of limitations does not bar the assessment or collection of tax due for 1976 under sec. 6501(e), based upon a substantial omission from gross income; for 1977 under sec. 6501(c) based upon an agreement to extend the time for assessment; or for 1978 or 1979 under sec. 6501(a), based upon the late filing of these returns. Held further, petitioner-husband has made valid joint returns for 1977, the year prior to petitioner-wife's death, and for 1978, the year of petitioner-wife's death, despite the absence of signatures on behalf of her estate. Held further, petitioner-husband has failed to establish that he is entitled to joint return rates as a "surviving spouse," within the meaning of section 2, for 1979, the year immediately following petitioner-wife's death.

Restaurant corporation A advanced to newly formed restaurant corporation B a total of $119,746 in 1976 in order to obtain expanded kitchen space and engage in other cost sharing. Held: the advances constituted a bona fide loan to corporation B and not a constructive dividend to petitioner-husband, the sole shareholder of both corporations.

In ostensibly separate contracts, petitioner sold his entire interest in LP, a limited partnership, and purchased condominium apartments from LP. Held: on the facts presented, the sale and purchase were a single transaction; petitioner effectively transferred his interest in LP for condominium apartments. Held,further, character and gain from transaction determined.

P, an attorney, received $30,000 in 1980 as compensation for legal services to be rendered over the next 2 years. Held: The $30,000 was received as compensation for future services and not as a loan to be forgiven at a weekly rate over 2 years. (2) The entire $30,000 was income to P when received in 1980 under the claim of right doctrine. (3) P was an employee and not liable for selfemployment tax.

P and her late husband established a "family trust" and began selling to others the materials relating to family trust plans. During 1975 and 1976, P and her husband received income from sales of materials for family trust plans and from other business activities. For 1975 and 1976, P and her husband filed joint returns showing as income only the amounts received for managing the family trust. P and her husband filed fiduciary returns for the family trust for 1975 and 1976. Such returns claimed deductions for personal expenses of P and her husband. Held: (1) The 16th Amendment to the United States Constitution is valid. (2) P, not the family trust, is taxable on all income earned by her and husband during 1975 and 1976. (3) P is liable for self-employment taxes on earnings from sales of family trust plans and from other businesses during 1975 and 1976. (4) P is liable for the addition to tax for fraud under sec. 6653(b), I.R.C. 1954, for 1975 and 1976.

In 1977, C, a cash basis taxpayer and attorney, acquired 15 shares (a 10 percent interest) of stock in Kappa Selectune, Inc. (Kappa), a subchapter S corporation, for… Held: The loan to C represented by the $45,000 nonrecourse note was too contingent to be included in C's cost basis for tax purposes. Estate of Baron v. Commissioner,83 T.C. 542 (1984), affd. 798 F.2d 65 (2d Cir. 1986); Saviano v. Commissioner,80 T.C. 955 (1983), affd. 765 F.2d 643 (7th Cir. 1985), followed.

P deducted substantial amounts as payments to a voluntary employees' beneficiary association (VEBA), claiming exempt status under sec.… Held: the plan was not an exempt VEBA where (1) the amounts contributed far exceeded the amounts reasonable for the stated purposes of the contributions; (2) excess funds were invested at the direction of the shareholder in a nonfiduciary manner; and (3) terms of the organizing agreement were not honored upon termination of the plan.

Petitioner was employed in 1981 as a canal pilot for the Panama Canal Commission. Held: The Panama Canal Treaty and its implementing agreement, T.I.A.S. 10030 and 10031, do not exempt petitioner from United States taxation on the wages he received from the Panama Canal Commission from Feb. 16, 1981 through Dec. 31, 1981.

Petitioners paid for their son's motocross racing expenses through their wholly owned small business corporation. Held: respondent has properly determined that petitioners' sponsorship of their son's motocross racing activities constitutes an activity not engaged in for profit within the meaning of section 183, I.R.C. 1954.

Respondent determined deficiencies and an addition to tax for fraud for each of the taxable years in issue, based upon unreported income, unreported capital gains, and disallowances of claimed… Held: petitioner-husband has failed to establish that he reported all of his income for each year, or that the unreported payments he received constitute either amounts that he paid to another person or that he received in the form of loans.

Held: On the facts, movable gypsum drywall partitions, storefront corridor partitions, cabinets, and decorative and security lighting are not structural components of a building and are thus section… Held: On the facts, movable gypsum drywall partitions, storefront corridor partitions, cabinets, and decorative and security lighting are not structural components of a building and are thus section 38 property eligible for the investment tax credit for 1981.

Held, respondent's determination of petitioner's taxable income for 1981 based upon the specific items method sustained. Held: respondent's determination of petitioner's taxable income for 1981 based upon the specific items method sustained. Held further, respondent's determination for 1982 and 1983 based upon data derived from Bureau of Labor Statistics tables sustained. Giddio v. Commissioner,54 T.C. 1530 (1970), followed.

Petitioner-corporation leased vacant land from a related partnership pursuant to a month-to-month lease. The partnership had purchased the land solely for petitioner's use. At the time of the purchase, it was anticipated that the land would be developed and ready for petitioner's use within 1 year. Petitioner made payments to the partnership pursuant to the month-to-month lease even though unforeseen, adverse economic conditions made it impracticable to develop the land until after the years in question. Held, petitioner's payments to the partnership were rental payments that were required to be made as a condition to the continued use or possession of the land for purposes of petitioner's trade or business, and the payments therefore constitute deductible rentals within the meaning of sec. 162(a)(3), I.R.C. 1954.

Held, P's claimed farm losses for 1979 and 1981 disallowed for failure of substantiation. Held: P's claimed farm losses for 1979 and 1981 disallowed for failure of substantiation.

Held, the affirmative allegations in R's answer were deemed admitted under Rule 37(c), Tax Court Rules of Practice and Procedure. Held: the affirmative allegations in R's answer were deemed admitted under Rule 37(c), Tax Court Rules of Practice and Procedure. Such allegations deemed admitted are sufficient to sustain deficiencies for the taxable years 1976 and 1977 against petitioner.

Ps were members of a partnership that conducted an over-the-air subscription television operation. Ps' broadcasting studio transmitted an over-the-air scrambled signal without the use of cables or wires. Subscribers received an electronic decoder box that unscrambled the signal. When a decoder was installed, the subscriber paid Ps a deposit refundable upon return of the decoder. The subscription agreement provided that the deposit could be used to offset (1) any fees owed by the subscriber upon termination of service, (2) any damage or destruction to the decoder, or (3) any costs or expenses incurred by the partnership as a result of the subscriber's breach of the subscription agreement. Held, the subscriber deposits were income to Ps upon receipt.