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In the notices of deficiency, respondent determined that
petitioners had ordinary income from the gas rebate payments in
the amounts that they actually received rather than in the
amounts reported on the corrected Schedules K-1.
Discussion
Petitioners do not dispute that they received ordinary
income from the West Florida Gas rebates, but they disagree with
respondent’s determination as to the manner in which the income
should be allocated between Briggs and the Morrises. On brief,
petitioners state that the issue is “whether the gas rebates
should go through Towers Construction and pass through to the
petitioners equally or be divided according to whom the checks
were made out.” Petitioners contend that the gas rebates were
earned by Towers Construction and should pass through to
Briggs and Mrs. Morris equally, each being a 50-percent
shareholder.7
Respondent replies first, in essence, that if petitioners
wanted the gas rebate payments allocated in this manner, they
should have done so when they first filed their returns, and
second, that respondent’s allocation “accurately reflects how
petitioners in fact treated the payments.”
7 Petitioners’ position has the effect of producing equal
and opposite adjustments to the Morrises’ and Briggs’
redetermined taxable incomes.
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Last modified: May 25, 2011