- 7 -
business expense under sections 162 and 267.1 Although Schedule
M to the return shows a deficit in retained earnings of $778,535
at the beginning of the fiscal year, no net operating loss
deduction is claimed on the face of the return. Payment of the
$168,099 had not been made at the time of the trial and
apparently has still not been made. At the time of trial,
petitioner still owed approximately $800,000 as commissions and
interest on sales of trenching machines to the Turkish
Government.
OPINION
Respondent's determinations are presumed to be correct, and
petitioner bears the burden of showing that they are wrong. Rule
142(a). Petitioner has not carried its burdens of proof and
persuasion that it is entitled, under sections 162 and 267, to
the balance of the commission deduction expense that respondent
disallowed.
Issue 1. Accrual of Expense Deduction for Commission Balance
Petitioner asserts that the disputed claimed deduction of
$168,099 represents accrued commissions and interest to AA&H from
sales that occurred in the tax year ending September 30, 1989.
Respondent argues that petitioner has not satisfied the all
1Unless otherwise indicated, all section references are to
the Internal Revenue Code and all Rule references are to the Tax
Court Rules of Practice and Procedure.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011