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After concessions by respondent,1 the issue for decision is
whether petitioners' Schedule C expenses are deductible as
current business expenses or must be treated as capital
expenditures.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulation of facts and the exhibits attached thereto are
incorporated herein by this reference. Petitioners resided in
Norristown, Pennsylvania, at the time they filed their petition
in this case.
Petitioners' Activities
During the taxable years 1991 and 1992, petitioners were
engaged in an unincorporated business entitled LM Development.
Petitioners started LM Development in 1987. Petitioners'
business is to purchase undeveloped land with low density zoning
and challenge unconstitutional and unlawful land practices by
government entities, thereby achieving appreciation in the value
of land assets owned or under contract.
Prior to March 1, 1992, petitioner Lee D. Hustead (Mr.
Hustead) was employed as an engineer at General Electric. Mr.
Hustead retired from General Electric on March 1, 1992, and
1 Respondent concedes that mortgage interest expenses of
$9,504.89 and $7,366.99 are deductible by petitioners on their
Schedules A for the taxable years 1991 and 1992, respectively.
Respondent also concedes $141 of insurance expenses for each year
as a Schedule A deduction.
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