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Docket No. Year Deficiency
16255-97 1993 $35,452
1994 17,053
20939-97 1992 112,339
1993 1,054
1 This amount is based on a $16,046 adjustment to income
under the indirect method (the source and application of funds
method). In the stipulation of facts, however, respondent and
petitioner Steve H. Benavidez (Benavidez) agree that Benavidez
failed to report taxable income of $8,646, rather than $16,046,
for the 1992 taxable year.
These cases have been consolidated for purposes of trial,
briefing, and opinion.
After concessions by Benavidez,1 the issue for our
consideration is whether the transaction between petitioners
should be treated as a sale-leaseback or a financing arrangement.
FINDINGS OF FACT2
Petitioners Lauro and Gayle Guaderrama (the Guaderramas) and
Benavidez resided in Las Cruces, New Mexico, at the time their
petitions were filed in these consolidated cases.
Prior to 1991, Benavidez owned a restaurant and bar called
Steve’s Tavern. Steve’s Tavern burned down in 1989. Steve’s
Tavern was insured, and Benavidez received the insurance proceeds
approximately 6 to 8 months after the fire. The insurance
1 The parties have stipulated that petitioner Steven H.
Benavidez (Benavidez) is not entitled to a deduction for
amortization of the cost of his liquor license.
2 The stipulation of facts and exhibits attached thereto are
incorporated herein by this reference.
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