Grady Whitlock Leasing Corporation - Page 3

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          payments from the insurance policy.  Petitioner deducted the                
          amounts of the premiums paid as insurance expense.                          
               During the taxable years 1991 and 1992, petitioner leased              
          automobiles through long-term contracts and reported the income             
          therefrom as rental income.  Petitioner used the cash receipts              
          and disbursements method to report most of its rental activity.             
          However, for the years at issue as well as prior years,                     
          petitioner used the accrual method to report its tax expenses               
          related to its automobile rental activity.  The tax payments in             
          question were not made until the year following the taxable year            
          to which they would relate under an accrual accounting system.              
          Petitioner's accrued tax expenses for 1991 were $25,335.44 and              
          for 1992 were $34,305.96.                                                   

               Petitioner bears the burden of proving that respondent's               
          determinations are incorrect.  Rule 142(a); Welch v. Helvering,             
          290 U.S. 111, 114 (1933).  This burden is not lessened in a fully           
          stipulated case.  Borchers v. Commissioner, 95 T.C. 82, 91                  
          (1990), affd. 943 F.2d 22 (8th Cir. 1991).  We deal with the                
          issues in turn.                                                             
               Related Entity Loss                                                    
               Section 267(a)(1) provides:                                            
               No deduction shall be allowed in respect of any loss                   
               from the sale or exchange of property, directly or                     

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