- 9 -
During the tax year 1992, a fence gate at the entrance to
Lakeview's premises was hit by a gravel truck and was damaged
beyond repair. Lakeview arranged for the installation of a new
gate, which was mounted on wheels and opened parallel to the
fence, as opposed to swinging on a hinge as the old gate had
operated. In addition, poles were added to the fence to support
the new sliding gate. On its 1992 return, Lakeview deducted the
$2,000 that it paid for the fence gate work as a repair expense.
Also during 1992 Lakeview paid a roofing contractor for work
done on the roof of the Automotive Property to correct leaks.
Previous attempts at repairing the roof were unsuccessful, due to
the fact that the roof had originally been designed to collect
water for cooling purposes. Consequently, the roofing material
was removed down to the wooden structure of the building, to
which a new roof drain was added, and a new roof was reapplied.
The replacement roof is expected to last 20 years. On its 1992
return, Lakeview deducted the $3,400 that it paid for the roof
work as a repair expense.
OPINION
1. "Forgiveness of Debt" Deduction
Respondent disallowed a $134,116 "forgiveness of debt"
deduction claimed by Lakeview on its 1992 return. Petitioner
contends that from 1984 through 1990, William skimmed cash from
Lakeview and split it with petitioner. When petitioner
subsequently became the sole shareholder of Lakeview, he filed
amended corporate returns for Lakeview reporting additional
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011