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Following settlement of various issues by the parties, the
sole issue for decision is whether petitioners are entitled to a
deduction for qualified residence interest under section 163(a).2
Some of the facts were stipulated, and those facts, with the
annexed exhibits, are so found and are incorporated herein by
reference. At the time the petition was filed, petitioners'
legal residence was Covina, California.
Saffet Uslu (petitioner husband) immigrated to the United
States from Turkey and, during the early 1980's, studied for a
graduate degree in petroleum engineering at the University of
Southern California (USC). In 1983, while petitioner husband was
attending graduate school, petitioner husband's brother, Haluk
Uslu (Haluk), immigrated to the United States from Turkey and
lived with petitioner husband. As an immigrant, Haluk was unable
2
The parties agreed to the following: (1) Petitioners are
entitled to an automobile expense deduction of $2,559 on the
Schedule C of petitioner husband; (2) petitioners are not
entitled to a repair expense deduction of $908 claimed on the
Schedule C of petitioner husband; (3) petitioners are not
entitled to deduct $1,550 of the $2,509 meals and entertainment
expense deduction claimed on the Schedule C of petitioner
husband; (4) petitioners are not entitled to deduct $1,802 of the
$5,267 "other expenses" claimed on the Schedule C of petitioner
husband; (5) petitioners are not entitled to deduct "other
expenses" of $1,254 claimed on the Schedule C of petitioner wife;
and (6) petitioners are entitled to an additional self-employment
tax deduction of $120 due to a change in net earnings from self-
employment resulting from the aforementioned adjustments. The
remaining adjustments to petitioners' child and dependent care
credit and to petitioners' itemized deductions for charitable
contributions and unreimbursed employee business expenses are
computational and will be resolved by the Court's holding on the
mortgage interest deduction issue.
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