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corresponding increase in the amount of flow-through income from
Wysong Medical to petitioners.
We must decide whether petitioners' share of ordinary income
from Wysong Medical should be increased by the amounts of $85,587
and $42,750 in 1992 and 1993, respectively. Our answer to this
question rests on whether amounts paid as rent by Wysong Medical
to Wysong Corp. represented ordinary and necessary expenditures
under section 162(a)(3). We answer this question in the negative
and thereby hold that petitioners' share of ordinary income
should be increased by the stated amounts. Unless otherwise
stated, section references are to the Internal Revenue Code in
effect for the years in issue. Rule references are to the Tax
Court Rules of Practice and Procedure.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulated facts and exhibits submitted therewith are
incorporated herein by this reference. Petitioners, husband and
wife, resided in Midland, Michigan, when they petitioned the
Court. They filed timely joint 1992 and 1993 Federal income tax
returns.
Petitioners own a commercial building (the Eastman Building)
located in Midland, Michigan. The Eastman Building currently
contains a total of 25,196 square feet, consisting of 15,400
square feet of warehouse space, 3,500 square feet of office area,
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