- 6 -
that there was a valid rental agreement between petitioners and
the liquor business, then respondent agrees that petitioners
would be entitled to interest and/or depreciation deductions on
Schedule E or Schedule A, as appropriate. Petitioners concede
that they failed to report, as income, the payments made by the
liquor business on the real property and that they failed to
claim any interest (personal or business) or depreciation
deduction to which they may be entitled. The parties agree that
if we decide that petitioners are entitled to deduct the business
interest, petitioners would be entitled to an overpayment to be
computed by the parties.4
3(...continued)
activity, and related matters, the parties agreed that if we
decide that Volm’s and petitioners had a valid business rental
arrangement, then petitioners will be entitled to an overpayment
to be computed by the parties. If we decide otherwise,
petitioners will not be entitled to an overpayment or be liable
for a deficiency. Accordingly, the parties agreed at trial that
the sole determinant to deductibility lies in the answer to the
question of whether petitioners and the liquor business had a
landlord and tenant relationship and whether rent was paid.
4 We note that the parties’ arguments were cryptic and
difficult to follow. For example, even though respondent agreed
that the outcome of this case depended solely on the whether a
rental relationship existed between petitioners and the liquor
business, respondent argued that the limitations of sec. 163(d)
would apply to petitioners’ interest payments on the Branch
property. Because of the manner in which the issue was posed by
the parties and the limited scope of our inquiry, we must assume
that respondent agrees that sec. 163 would not limit petitioners’
deduction if we decide the issue, as framed, in petitioners’
favor.
Page: Previous 1 2 3 4 5 6 7 8 9 Next
Last modified: May 25, 2011