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address petitioners’ claim for an overpayment, the parties have
asked us to decide whether the interest paid by petitioners is
deductible as business interest. If the interest is deductible
as business interest, petitioners would be entitled to certain
deductions that were not originally claimed, and, in turn, they
would be entitled to an overpayment.
Unless otherwise indicated, section references are to the
Internal Revenue Code in effect for the year in issue, and Rule
references are to the Tax Court Rules of Practice and Procedure.
FINDINGS OF FACT1
At the time their petition was filed, petitioners resided in
Temple Hills, Maryland. During August 1992, petitioners and
petitioner husband’s sister-in-law purchased real property
located at 3302 Branch Avenue, Temple Hills, Maryland (Branch
property). Although the sister-in-law was a named purchaser, she
was only nominally involved in the real estate acquisition. The
improvements on the property were a two-story building (Branch
building) and a parking lot. Concurrent with the Branch property
purchase, the shares of stock of Volm’s Enterprise Corp. (Volm’s)
were purchased from the seller of the real estate. Volm’s, a
subchapter C corporation, operated a liquor store on the first
floor of the Branch building under the name “Branch Avenue
1 The stipulations of fact and attached exhibits are
incorporated herein by this reference.
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