Lee D. and Marjorie L. Hustead - Page 7

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          Development for the taxable years 1989 and 1990.  The petition              
          therein was filed with the Court on September 11, 1992.  The                
          Court in its opinion, filed August 8, 1994, agreed with                     
          respondent that the disputed expenses were to be capitalized.               
          The Court of Appeals for the Third Circuit, without published               
          opinion, affirmed this Court's decision on June 28, 1995.                   
          Hustead v. Commissioner, 61 F.3d 895 (3d Cir. 1995).                        


                                       OPINION                                        
               The issue in this case is whether petitioners' 1991 and 1992           
          Schedule C expenses can be deducted as current business expenses            
          or whether they constitute capital expenditures.  The amounts or            
          business purpose of the claimed expenses are not in dispute.                
               Although the parties have stipulated that the above is the             
          only issue for decision, petitioners on brief continue to assert            
          that "respondent's failure to cite any basis in law (reference to           
          an IRC section) acts to deprive taxpayers of a fair trial and due           
          process of law."  Petitioners request that the burden of proof be           
          upon respondent as a sanction for such failure.                             
               The notices of deficiency indicated that respondent had                
          disallowed all Schedule C expenses for both 1991 and 1992.  This            
          clearly advised petitioners of the basis for the deficiencies.              
          The Court's opinion in the earlier case, which addressed the same           
          issue, was issued prior to the mailing of the notices involved              






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