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In April 1983, RTS opened an account at Manufacturers.
Beginning in September 1983, the telecommunications payments were
made by Manufacturers charging and crediting the accounts of RTS,
petitioner, and Proz. By letter dated July 23, 1983, petitioner
instructed Manufacturers to charge petitioner's account and
credit RTS' account in the following amounts: (1) $34,296.96
each month through and including December 1984 and (2) $49,206.16
each month commencing January 1985 through and including December
1994. From September 1983 to June 1990, Manufacturers complied
with those instructions. Additionally, Manufacturers (1) charged
RTS' account in like amounts and credited such amounts to Proz'
account and (2) charged Proz' account in like amounts and
credited such amounts to petitioner's account. As part of the
telecommunications equipment activity, (1) petitioner had no
obligation to make any payment to RTS, (2) RTS had no obligation
to make any payment to Proz, and (3) Proz had no obligation to
make any payment to petitioner.
Petitioners' Deductions
With regard to the computer equipment, petitioners reported
the following on their tax returns for the years is issue:
1980 1981 1982 1983
Income $83,145 $83,145 $83,145 $83,145
Deductions
Depreciation 94,438 73,450 73,450 73,450
Interest 45,816 41,322 41,322 56,185
Losses 57,109 31,627 31,627 46,490
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