- 20 -
It apportioned the depreciation deduction it had computed to the
J. Shirleys. The J. Shirleys reported as gross income $4 of
interest and $13,749 of “NonPassive Income”, both from Caralan
Trust, and claimed a depreciation deduction of $19,896, on
account of the depreciation deduction apportioned to them by the
Caralan Trust.
Respondent determined a deficiency in the J. Shirleys’ tax
by notice dated June 1, 1999 (the J. Shirleys’ notice). Among
the adjustments giving rise to that determination are positive
adjustments to the J. Shirleys’ gross income of (1) $4 and
$42,000 on account of such amounts of interest and gross income,
respectively, of Caralan Trust’s omitted from their gross income
and (2) $179,791 on account of such amount of gross receipts of
Alexion Trust’s omitted from their gross income. Respondent now
concedes all of the first two adjustments and $13,749 of the
third adjustment. Respondent concedes the first adjustment
because the J. Shirleys reported the $4 of interest attributed to
them from Caralan Trust. Respondent also concedes the $42,000 of
gross income he attributed to the J. Shirleys from Caralan Trust.
Respondent does so based on his attribution to the J. Shirleys of
Alexion Trust’s gross receipts of $179,791. Such gross receipts,
after the deduction of certain expenses (disallowed by
respondent), including $42,000 of rent paid to Caralan Trust,
were, in the amount of $101,437, treated by Alexion Trust as a
Page: Previous 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 NextLast modified: May 25, 2011