Ruby Jean Stevens - Page 3




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          expenditures under section 263.3  We hold that the professional             
          fees at issue were capital expenditures under section 263.                  
                                  FINDINGS OF FACT                                    
               Most of the relevant facts have been stipulated and are so             
          found.4  The stipulation of facts and supplemental stipulation of           
          facts are incorporated herein by this reference.                            
               Petitioner resided in Gracemont, Oklahoma, at the time the             
          petition in this case was filed.                                            
               On January 18, 1990, petitioner's husband, S.G. "Red"                  
          Stevens (Mr. Stevens), as grantor, executed a Trust Agreement               
          establishing a revocable inter vivos trust (the Trust) under the            
          laws of the State of Oklahoma and designating Mr. Stevens as                
          Trustee.  Mr. Stevens’ property was transferred to, and                     
          thereafter owned by, the Trust.                                             
               Pursuant to the terms of the Trust Agreement, all Trust                
          income was either distributed to Mr. Stevens or added to the                
          principal of the Trust during his lifetime.  For Federal income             
          tax purposes, the Trust was classified as a grantor trust.                  



               3All section references are to the Internal Revenue Code as            
          in effect for the taxable years at issue, and all Rule references           
          are to the Tax Court Rules of Practice and Procedure.  Monetary             
          amounts are rounded to the nearest dollar.                                  
               4Our findings include a correction of a typographical error            
          in par. 28 of the stipulation of facts; i.e., "1994" is changed             
          to "1993".                                                                  




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