- 30 -
the installment note is not gross income derived
in the ordinary course of a trade or business.
Alternatively, petitioner argues that, even assuming
that petitioner's interest income is treated as portfolio
income, respondent has incorrectly allocated all of
petitioner's business expenses to its rental income and,
thereby, respondent has overstated the amount of the
deductions that are disallowed under section 469. Set
forth below are schedules that show the allocation of
expenses made in the notice of deficiency, the allocation
of expenses that petitioner contends is appropriate,
respondent's allocation, and the difference between the
two allocations:
Notice ofPetitioner'sRespondent's
Allocation of Expenses for 1992 DeficiencyAllocation
Allocation Difference
Rental receipts $48,633.00$48,633.00$48,633.00-0-
Capital gain, installment sales10,364.0010,364.0010,364.00 -0-
Income from rental activity58,997.0058,997.0058,997.00 -0-
Officer compensation39,750.0014,906.2539,750.00 ($24,843.75)
Auto expense 1,417.00531.38 1,417.00 (885.62)
Insurance 1,699.001,699.00 1,699.00 -0-
Interest 8,136.008,136.00 8,136.00 -0-
Labor 5,869.005,869.00 5,869.00 -0-
Legal and accounting2,096.00692.52 692.52 -0-
Miscellaneous 627.00 207.16 627.00 (419.84)
Repairs and maintenance2,043.002,043.00 2,043.00 -0-
Supplies 389.00 128.53 389.00 (260.47)
Taxes
Payroll 3,267.881,225.46 3,267.88 (2,042.42)
Real estate -0- -0- -0- -0-
Franchise/Income 5,383.781,778.80 1,778.80 -0-
Utilities and telephone395.00 130.50 395.00 (264.50)
Yard work and mowing3,590.003,590.00 3,590.00 -0-
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