Carl J.D. Bauman and Margaret A. Bauman - Page 5

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          required Bauman’s periodic attention.  Petitioners’ Federal                 
          income tax return for 1981 was not received by the IRS until June           
          30, 1983.  The record does not contain an explanation for the               
          tardiness of petitioners’ return for taxable year 1981.                     
               During the taxable years at issue,3 Bauman was a limited               
          partner in ERL.  In 1980, ERL, as lessee, entered into a lease              
          agreement with JAD Coal Co., Inc. (JAD), as lessor, to mine and             
          market coal underlying certain land in Harlan County, Kentucky.             
          This lease transaction was the subject of this Court’s opinion in           
          Bauman v. Commissioner, T.C. Memo. 1988-122 (occasionally Bauman            
          I).4  In Bauman I, this Court held that ERL’s royalty obligations           
          under its lease agreement with JAD were not “substantially                  
          uniform” and were not “paid at least annually”.  As such, we                
          further held that the royalty obligations were not deductible as            
          advance royalties paid or accrued “as a result of a minimum                 
          royalty provision” under section 1.612-3(b), Income Tax Regs.               
          The Court granted respondent’s motion for partial summary                   
          judgment with respect to this minimum royalty issue.  Bauman I,             
          however, was limited to the question of whether the royalty                 
          obligations qualified under a minimum royalty provision as                  

               3The parties have reached settlement with respect to taxable           
          year 1979.  The issues before the Court pertain to taxable years            
          1980, 1981, and 1982.                                                       
               4The parties in Bauman v. Commissioner, T.C. Memo. 1988-122,           
          are identical to the parties in the instant case.                           

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