Amdahl Corporation and Consolidated Subsidiaries - Page 14

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          employee benefits and are fully deductible under section 162(a).4           
          Section 162(a) allows a deduction for ordinary and necessary                
          expenses paid or incurred during the taxable year in carrying on            
          a trade or business.  Sanford v. Commissioner, 50 T.C. 823, 826             
          (1968), affd. per curiam 412 F.2d 201 (2d Cir. 1969).  Losses               
          from the sale of capital assets by corporate taxpayers are                  
          deductible only to the extent of capital gains.  Secs. 165(f),              
          1211(a).  Deductions are a matter of legislative grace, and                 
          taxpayers bear the burden of proving that they are entitled to              
          the deductions claimed.  Rule 142(a); INDOPCO, Inc. v.                      
          Commissioner, 503 U.S. 79, 84 (1992).                                       
               Respondent contends that petitioner acquired ownership of              
          the residences of its relocating employees in both regular and              
          assigned sales and that in petitioner's possession the residences           
          are capital assets.  Accordingly, respondent argues that                    
          petitioner cannot deduct the payments to the RSC against ordinary           
          income under section 162.  Although petitioner never took title             
          to its employees' residences, respondent determined that in                 
          substance petitioner, by its control over the property, was the             
          owner.  Respondent's position thus follows the ruling position              
          that relocating employees' homes purchased by their employer to             
          assist the employees in the sale of the residences are capital              

               4 All section references are to the Internal Revenue Code in           
          effect for taxable years in issue, and all Rule references are to           
          the Tax Court Rules of Practice and Procedure, unless otherwise             

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