Dennis L. and Sharon E. Hayden - Page 2

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          Rules 180, 181, and 182.1  The Court agrees with and adopts the              
          opinion of the Special Trial Judge that is set forth below.                  
                         OPINION OF THE SPECIAL TRIAL JUDGE                            
               POWELL, Special Trial Judge:  Respondent determined a                   
          deficiency in petitioners' 1994 Federal income tax and an                    
          accuracy-related penalty under section 6662(a) in the respective             
          amounts of $3,784 and $292.60.                                               
               The issues are whether petitioners are entitled to a                    
          deduction in the amount of $17,500 under section 179 and whether             
          petitioners are liable for the accuracy-related penalty under                
          section 6662(a).  At the time the petition was filed in this                 
          case, petitioners resided in Frankfort, Indiana.                             
               The facts may be summarized as follows.  Petitioners are the            
          sole partners in a partnership known as Leddos Frozen Yogurt, LLC            
          (Leddos) that commenced operations on September 1, 1994.  During             
          1994, Leddos purchased equipment for $26,650.  On the partnership            
          return (Form 1065), Leddos reported the following:                           
                         Gross Receipts            $20,105                             
                         Cost of Goods Sold        22,529                              
                         Total Income (loss)      (2,424)                              
          The partnership reported total deductions in the amount of                   
          $13,294, and showed a loss in the amount of $15,718.  These                  
          figures did not include any deduction for the expense of section             
          179 property.  On Form 4652 (Depreciation and Amortization),                 

               1  Unless otherwise indicated, all section references are to            
          the Internal Revenue Code in effect for the year at issue, and               
          all Rule references are to the Tax Court Rules of Practice and               

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