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business included managing the Burke Property, collecting its
liability against IML, and selling Lot 51. Petitioner also spent
considerable time and money attempting to exchange the Burke
Property for other real estate in a section 1031 transaction.
Nevertheless, several of petitioner's claimed deductions deserve
special attention.
Several checks to the S.F. Commercial Club in both 1989 and
1990, a check to the Secretary of State of Colorado for $5 in
1990, and one to the Riverside County Clerk's Office for $67.80
in 1990 are unexplained, and are therefore disallowed.
Petitioner claims that it maintained "key man insurance" on
Byrne. Byrne testified that he had been an officer of the
corporation, off and on, over the years. The corporate minutes
indicate that he was also petitioner's vice president during 1989
and 1990. Petitioner was a 40-percent beneficiary under the
policy. Under these facts, section 264(a) controls
deductibility. It provides:
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