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$65,000 in payments on its 1989 Form 1120 as "C.L.--Management
Fees".
Respondent determined that MIC had to recognize $1,162,215
of the $1,837,500 condemnation award in its 1989 taxable year.
Alternatively, respondent determined, Beverly had to recognize
$1,114,500 of the condemnation award in its 1988 taxable year.1
Respondent also determined that MIC could not deduct the $65,000
that it claimed as "Contract Labor Management" in its 1989
taxable year because "it has not been established that any amount
claimed constitutes an ordinary and necessary business expense,
was expended or was expended for the purpose designated."
Modern Bookkeeping Service provided bookkeeping services for
petitioners.
The City demolished the Property in July 1995.
OPINION
We first decide whether the City paid any part of the
condemnation award for an interest other than the Property.
Where a lump-sum condemnation award consists entirely of
compensation for property taken, this Court has held in certain
circumstances that the award may not be allocated among the
various items of property involved. Asjes v. Commissioner,
1 The only other adjustment that respondent made to
Beverly's 1988 taxable year concerned net operating loss (NOL)
carrybacks. Respondent carried back NOL's from Beverly's 1989,
1990, and 1991 taxable years to offset part of the increased
income that respondent determined was taxable to Beverly on
account of the condemnation award.
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Last modified: May 25, 2011