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Year Deficiency
1992 $48,689
1993 19,490
1994 8,743
The sole issue for decision is whether petitioners are entitled
to deductions under section 162 or section 212 for legal expenses
paid during the years 1992, 1993, and 1994.1
FINDINGS OF FACT
Most of the facts have been stipulated and are so found.
The stipulations of facts and attached exhibits are incorporated
herein by this reference. At the time the petition in this case
was filed, petitioners resided in Sac City, Iowa.
Petitioner Jean Lange (hereinafter referred to as peti-
tioner) and his brother, Elmer Lange (Elmer), acquired an 80-
percent interest in Union State Bank (the Bank) in late 1979 or
1980. Later, the brothers formed Madison Holding Company
(Madison) and exchanged the Bank stock (and the debt they had
incurred in purchasing the Bank stock) for stock in Madison.
While each brother had purchased an equal number of shares of the
Bank stock, petitioner incurred $120,000 more debt than Elmer in
1All section references are to the Internal Revenue Code in
effect for the taxable years in issue, and all Rule references
are to the Tax Court Rules of Practice and Procedure, unless
otherwise indicated.
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