AMW Investments, Inc. - Page 10

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          were spent by the Fund.  As of September 1990, a total of                   
          $1,333,350 had been paid to the Fund by the various corporations.           
               David Shindel (Mr. Shindel) is a certified public accountant           
          who was retained by Mr. Klein in 1987, on behalf of MBS and                 
          several of its clients, to review their corporate books and                 
          records for compliance with accounting practice and tax law.                
          Upon reviewing petitioner's books, Mr. Shindel noticed the Second           
          Clarksville note.  Mr. Shindel brought this note to the attention           
          of Mr. Mohney, recommending that it be satisfied with accrued               
          interest.  Mr. Shindel also recommended that the “note” on the              
          Mishawaka property be satisfied with accrued interest.  During              
          1989 and 1990, petitioner paid Mr. Mohney the balance due on the            
          Mishawaka and Clarksville properties plus accrued interest.                 
          Petitioner deducted $55,000 and $105,000 as interest on its 1990            
          and 1991 returns respectively.                                              
               Mr. Shindel prepared all of petitioner’s Federal tax returns           
          that are in issue herein.                                                   
          1.  Legal Expenses                                                          
               We must decide whether petitioner may deduct its                       
          contributions to the Fund as ordinary and necessary business                
          expenses under section 162(a).  Petitioner argues that it may.              
          Petitioner contends that these contributions were tied directly             
          to its business because the contributions were made to protect or           

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