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All 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. After concessions,1
the issues for decision are: (1) Whether petitioners’ ranching
and farming activities constituted activities engaged in for
profit under section 183, and if so, whether petitioners
substantiated claimed expenses from the activities;2 (2) whether
petitioners are entitled to deduct certain expenses associated
with a rental property located in St. John, U.S. Virgin Islands
(the St. John rental property); (3) whether petitioners may
deduct two noncash charitable contributions; and (4) whether
petitioners are liable for accuracy-related penalties pursuant to
section 6662(a).
1 Petitioners concede the Schedule E deductions associated
with rental properties in Nacogdoches, Texas, for the 1993 and
1994 taxable years. Petitioners also concede various Schedule E
deductions associated with a rental property in St. John, U.S.
Virgin Islands (the St. John rental property), for the 1992 and
1993 taxable years. Respondent concedes that certain taxes
reported on petitioners’ Schedule E with regard to the St. John
rental property are proper itemized deductions under sec. 63(d).
Respondent allowed only certain of petitioners’ cash charitable
contributions. For the 1992, 1993, and 1994 taxable years,
petitioners failed to argue in their petition, at trial, and in
their posttrial briefs that they were entitled to cash charitable
contributions in excess of the amount allowed by respondent. We
therefore find that petitioners concede this issue. See Petzoldt
v. Commissioner, 92 T.C. 661, 683 (1989). Furthermore,
respondent concedes that petitioners did not underreport their
interest income on their 1992, 1993, and 1994 tax returns.
2 Although it is unclear from the notice of deficiency, we
assume respondent would deny, for lack of substantiation, only
those expenses in excess of the income from the activities; i.e.,
the losses from the activities.
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