AJF Transportation Consultants, Inc., et al. - Page 15

                                                    - 15 -15                                                      

             expenses incurred by AJF on behalf of J.C. Penney.  It is true                                       
             that we have previously held that "'where a taxpayer makes                                           
             expenditures under an agreement that he will be reimbursed                                           
             therefor, such expenditures are in the nature of loans or                                            
             advancements and are not deductible as business expenses.'"                                          
             Canelo v. Commissioner, 53 T.C. 217, 224 (1969) (quoting Patchen                                     
             v. Commissioner, 27 T.C. 592, 600 (1956)), affd. 447 F.2d 484                                        
             (9th Cir. 1971).                                                                                     
                    Nevertheless, as respondent points out, AJF deducted amounts                                  
             for fuel reimbursement expenses on its 1988, 1989, and 1990 tax                                      
             returns which persistent course of action is inconsistent with                                       
             petitioners' assertion that the reimbursements were repayments of                                    
             a loan.  We have also held that "Taxpayers are entitled to attack                                    
             the form of their transactions only when their tax reporting and                                     
             other actions have shown an honest and consistent respect for                                        
             what they argue is the substance of the transactions."  FNMA v.                                      
             Commissioner, 90 T.C. 405, 426 (1988), affd. 896 F.2d 580 (D.C.                                      
             Cir. 1990).                                                                                          
                    Neither AJF's cash disbursements journal nor other                                            
             accounting records treated the fuel reimbursements as loan                                           
             repayments.  Had AJF intended to treat the fuel reimbursement                                        










Page:  Previous  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  Next

Last modified: May 25, 2011