- 10 -
Respondent allowed petitioners additional Schedule E deductions
of $1,092,804 for depreciation and $121,914 for fringe benefits
paid to employees. Additionally, respondent increased
petitioners' adjusted gross income by $91,672 for fringe benefits
received and disallowed $71,879 in itemized deductions.
Respondent further determined that petitioners were liable for an
accuracy-related penalty pursuant to section 6662 of $195,453.
The parties have settled all of the issues determined in the
notice of deficiency except the disallowed Schedule E rental
deduction for the trucks and related equipment leased by Country-
Fed and the allowable depreciation deduction if the rental
deduction is disallowed.
OPINION
We must decide whether section 7701(h)(1) precludes
consideration of the TRAC contained in the master leases covering
the lease transactions and whether the lease transactions should
be treated as leases or as purchases of trucks. Neither party
disputes that the provisions of the master leases that require
either the lessor to remit to Country-Fed the amount by which the
sale proceeds of the truck exceed the remaining base price plus
the cost of the sale, or, conversely, require Country-Fed to
remit to the lessor the amount by which the remaining base rent
plus the cost of the sale exceeds the proceeds, are a "terminal
rental adjustment clause" within the meaning of section
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: May 25, 2011