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flying bridge motor yacht (the second yacht). Ballard Marine
agreed to pay $530,000 for the second yacht, but was credited
with $300,000 as the trade-in value of the yacht.
Ballard Marine was not successful in chartering the second
yacht. Sometime in 1988, Ballard Marine terminated its charter
operations.
Books and Records; Ballard Marine’s Tax Returns
Petitioner kept records of Ballard Marine’s income and
expenses on a computer. Petitioner opened a bank account for
Ballard Marine. Ballard Marine obtained oil company credit cards
in its own name. It dealt in its own name with the power company
in Florida. It had its own stationery.
Ballard Marine made returns of income for 1986 and 1987 on
Forms 1120S, U.S. Income Tax Return for an S Corporation. On
those forms, Ballard Marine reported the following items of
income and deduction:
1986 1987
Gross income $ 0 $13,982
Deductions:
Interest 2,439 16,175
Depreciation 54,806 80,383
Insurance 3,465 3,210
Legal fees 307 ---
Consulting
fees 5,170 ---
Transport
crew/fuel 5,171 18,267
Mooring/
docking 2,281 8,001
Miscellaneous 50 2,865
Telephone &
utilities --- 1,084
Repairs and
maintenance --- 10,251
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Last modified: May 25, 2011