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for the taxable year 1993. Respondent also determined a
deficiency in the Federal income tax of petitioner Holland
America Bulb Farms, Inc. (Holland America), of $35,304 for its
fiscal year ended September 30, 1993 (FYE 1993). Petitioners
filed separate petitions contesting respondent’s determinations.
Because these cases present common issues of fact and law, they
were consolidated for trial, briefing, and opinion pursuant to
Rule 141(a).1
After concessions,2 the issues for decision are:
(1) Whether Holland America is entitled to deduct the
following expenses as ordinary and necessary business expenses
under section 162(a): (a) $35,296 in landscaping expenses, (b)
$34,246 in grocery expenses reimbursed to Mr. and Mrs. Dobbe, (c)
$12,203 for the construction of a new solarium attached to Mr.
and Mrs. Dobbe’s residence, (d) miscellaneous expenses claimed
1All section references are to the Internal Revenue Code in
effect for the years in issue, and all Rule references are to the
Tax Court Rules of Practice and Procedure. Monetary amounts are
rounded to the nearest dollar.
2In the notice of deficiency, respondent disallowed a
deduction of $3,926 by Holland America for a telephone system.
Before trial, the parties agreed that Holland America’s
expenditure of $3,926 will be treated as a capital expense and
that Holland America will be allowed depreciation deductions
under secs. 167 and 168 using MACRS guidelines and a 7-year
recovery period. Accordingly, Holland America’s taxable income
for FYE 1993 is increased $3,926 to reflect Holland America’s
concession concerning the deductibility of the expense under sec.
162(a) and decreased $982 to reflect the depreciation deduction
conceded by respondent.
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