2 facts and holdings in T.C. Memo. 1993-326 are incorporated by this reference. The issue in the prior case was whether petitioner D. Sherman Cox (Mr. Cox) was entitled to deduct payments made to his wife petitioner Maxine M. Cox (Mrs. Cox), and on behalf of his law practice, for the rental of property owned by Mr. and Mrs. Cox as tenants by the entireties. The property at issue was located in St. Louis, Missouri, and purchased by petitioners in November 1980. Mr. Cox's law practice occupied and paid "rent" of $18,000 to petitioners for the property during 1987. On their joint 1987 Federal income tax return, petitioners reported receipt of the $18,000 in rental income on their Schedule E. Mr. Cox reported the $18,000 in rental payments on his Schedule C for his law practice as an ordinary and necessary business expense. Respondent disallowed the Schedule C rental expense of $18,000 in its entirety because the payments were made for the use of property to which Mr. Cox has title and in which he holds an equity interest. Respondent also deleted the corresponding rental income reported by petitioners on Schedule E. Contrary to the positions argued by both petitioners and respondent, we held that based on petitioners' interest in the property, as determined by Missouri law and under section 162(a), Mr. Cox was entitled to deduct one-half of the payments, and, in turn, one- half of the payments was reportable as rental income on the joint return.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 Next
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