Woody F. Lemons - Page 49

                                       - 49 -                                         
             that the joint venture was engaged in the trade or business              
             of developing the Moonlight Beach property, and we find                  
             that petitioner continued that business in his individual                
             capacity during 1986.  We also find that petitioner engaged              
             in that business in order to realize a profit from the                   
             joint venture's sale of the villas and related land to the               
             club.                                                                    

             Annual Dues Issue                                                        
                  Petitioner claims to have paid annual dues of $10,500               
             to the beach club in 1986 with respect to the eight club                 
             memberships that he owned during the year.  Petitioners                  
             assert that this expenditure, to the extent substantiated,               
             was made to maintain the club memberships.  Accordingly,                 
             petitioners argue that they are each entitled to deduct                  
             one-half of the amount paid under section 162(a) as an                   
             ordinary and necessary business expense.  They do not claim              
             to be entitled to deduct that amount under section 212.                  
                  Respondent disallowed the deductions in the notices of              
             deficiency on the ground that "there is no business purpose              
             for this transaction".  In respondent's post-trial briefs,               
             respondent concedes that the expenditure, to the extent                  
             substantiated, would be deductible as a business expense if              
             the Court finds that the club memberships were held by                   







Page:  Previous  39  40  41  42  43  44  45  46  47  48  49  50  51  52  53  54  55  56  57  58  Next

Last modified: May 25, 2011