Richard D. Nelson - Page 20




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            appeared, at least on paper, as not directly involved.  It is                              
            difficult to tell from the settlement the nature of the $5,500                             
            portion of the monthly payments.  At the very least and in                                 
            essence, petitioner had the right to earn income in connection                             
            with the bingo operation, and he was successful in protecting                              
            that right from the interference of the Lichtys and perhaps                                
            others.  The $5,500 monthly payments were not in exchange for an                           
            equity interest but instead were a cost of continuing the bingo                            
            business operation.  Accordingly, we hold that November is                                 
            entitled to deduct the $5,500 portion of the payments made to the                          
            Lichtys through their corporate entity for the years under                                 
            consideration.                                                                             
            Has Petitioner Shown That $10,350, $35,436, and $35,436 Were                               
            Incurred for Supplies for the 1991, 1992, and 1993 Tax Years,                              
            Respectively?                                                                              
                  Respondent disallowed the above-listed amounts due to                                
            petitioner’s failure to substantiate that the amounts were                                 
            expended for deductible business supplies.  Petitioner did not                             
            offer any evidence at trial regarding these amounts.                                       
            Accordingly, respondent’s determination on these items is                                  
            sustained.                                                                                 













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