T.C. Memo. 1996-78
UNITED STATES TAX COURT
MASCHMEYER’S NURSERY, INC., Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 22315-94. Filed February 26, 1996.
R determined that deductions claimed by P for
annual rental payments made to P’s sole shareholder
under a real property lease exceeded the fair rental
value of the property, and disallowed depreciation
deductions claimed by P for improvements made to a
residence used by P’s sole shareholder. Held: Rental
payments were not deductible to the extent that they
exceeded the amount allowed by R. Held, further, the
residence occupied by P’s sole shareholder was used in
P’s business for purposes of sec. 167, I.R.C., and
hence, depreciation may be deducted by P.
F. Pen Cosby, for petitioner.
Ronald T. Jordan, for respondent.
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