- 3 - purchased using credit cards. Petitioners deducted the interest payments on the credit card debt on Schedule F, Profit or Loss From Farming, in prior taxable years. In or before 1998, petitioners obtained a home equity loan and used the proceeds to pay off the credit card debt incurred in connection with the equipment. Petitioners paid $5,8712 of interest on the home equity loan in 1998 and claimed that amount as an interest expense deduction on their Schedule F. Respondent determined that the interest expense was not paid or incurred in connection with the tree farm and, therefore, should not be deducted on Schedule F. Instead, respondent determined that the interest expense should be deducted on Schedule A, Itemized Deductions. 2. The Seamstress Business In 1998, Mrs. Alexander operated a seamstress business from petitioners’ home. During that year petitioners’ son, Steven, was a 21-year-old college student in California. When Steven returned home for the summer, he assisted Mrs. Alexander with the seamstress business. Steven performed a variety of tasks such as purchasing supplies, drafting sewing patterns, and cleaning Mrs. 2 All amounts are rounded to the nearest dollar.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011