Gregory H. and Elizabeth A. Price - Page 10




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          return for 1989, the $56,921 that petitioner received from                  
          College Park in 1989 to make improvements to Store 6 was not                
          reflected as taxable income.  Similarly, on petitioners’ joint              
          Federal income tax return for 1990, the $8,465 that petitioner              
          received from College Park in 1990 to make improvements to Store            
          6 was not reflected as taxable income.                                      
               On audit, respondent treated the $99,946 received by the               
          partnership from Peoria in 1989, $39,788 of the $56,9212 received           
          by petitioner from College Park in 1989, and the $8,465 received            
          by petitioner from College Park in 1990 as specific items of                
          unreported taxable income.                                                  
               Under section 61, gross income includes all income from                
          whatever source derived.  See Commissioner v. Glenshaw Glass Co.,           
          348 U.S. 426, 431 (1955).  Respondent relies on this general                
          proposition in treating as taxable income the funds the                     
          partnership and petitioner received in 1989 and 1990 from Peoria            
          and College Park.                                                           
               Generally, however, gross income does not include funds                
          received by a taxpayer in reimbursement for expenses paid on                
          behalf of another.  See Gray v. Commissioner, 10 T.C. 590, 596-             




          2    Respondent treated $17,133 of the funds received by                    
          petitioner from College Park in 1989 as a nontaxable                        
          reimbursement for leasehold improvements.                                   




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