Dennis L. and Sharon E. Hayden - Page 1

                                   112 T.C. No. 11                                     

                               UNITED STATES TAX COURT                                 

                DENNIS L. HAYDEN AND SHARON E. HAYDEN, Petitioners v.                  
                    COMMISSIONER OF  INTERNAL REVENUE, Respondent                      

               Docket No. 590-98.                     Filed March 19, 1999.            
                    Ps are the sole partners in L.  During 1994, L expended            
               $26,650 on sec. 179 property and elected to expense $17,500             
               of that amount.  Without regard to this deduction, L had no             
               taxable income for the 1994 taxable year.  The deduction                
               under sec. 179 flowed through to Ps' 1994 return.  Sec.                 
               1.179-2(c)(2), Income Tax Regs., provides that a                        
               "partnership may not allocate to its partners as a sec. 179             
               expense deduction for any taxable year more than the                    
               partnership's taxable income limitation for that taxable                
               year".  Ps contend that the regulation is invalid.  Held:               
               Sec. 1.179-2(c)(2), Income Tax Regs., is valid and                      
               respondent's disallowance of the deduction is sustained.                
               Dennis L. Hayden and Sharon E. Hayden, pro se.                          
               Brian M. Harrington, for respondent.                                    

               DAWSON, Judge:  This case was assigned to Special Trial                 
          Judge Carleton D. Powell pursuant to section 7443A(b)(3) and                 

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