The Cleveland Trencher Company - Page 7

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          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                      
               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             
          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.                                      

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