Alexandra M. Medlin - Page 5

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            Burley and Mary claimed an alimony paid deduction for this amount                           
            on their 1994 return.  Although their treatment of this amount as                           
            alimony is not in dispute, the proper characterization of amounts                           
            paid for an automobile and related expenses and for medical                                 
            insurance premiums remains in issue.                                                        
            Automobile and Related Expenses                                                             
                  During 1994, Burley's wholly owned corporation, Medlin Motor                          
            Co., Inc. (the dealership), paid for the lease of an automobile                             
            from Ford Motor Credit Corporation (FMCC).  Burley provided the                             
            automobile to Alexandra for her use during 1994.  Alexandra did                             
            not sign the lease with FMCC.                                                               
                  The dealership paid for the insurance on the automobile.  It                          
            also provided Alexandra with a dealership credit card which was                             
            used exclusively for charging gas and other maintenance expenses                            
            for the automobile.  The dealership paid for these credit card                              
            charges.  It issued Burley a Form 1099-DIV for 1994 which                                   
            reflected that he had received a constructive dividend in the                               
            amount of $4,952, the total cost of the lease, insurance, and                               
            credit card charges paid by the dealership during 1994.                                     
                  Alexandra did not report the $4,952 as alimony received on                            
            her original and amended 1994 returns.  Burley and Mary claimed                             
            an alimony paid deduction for this amount on their 1994 return.                             
            In the statutory notices of deficiency, respondent, as a                                    
            stakeholder in this case, included the $4,952 in Alexandra's                                






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