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After concessions,3 the only issues4 for decision are:
1) Whether the Castro Family Trust (CFT) and the Castro &
Co. Jewelers Trust (CCJT) (collectively referred to as the
trusts) should be disregarded for Federal income tax purposes;
2) whether the income and expenses of the jewelry business
allegedly owned by the CCJT and operated by Kevin D. Castro
during the years at issue must be reported by Kevin D. Castro and
Margarita C. Castro (collectively referred to as the Castros);
3Respondent conceded that, if we hold the trusts are invalid
for Federal income tax purposes, the trusts are not liable for
the income tax on income properly chargeable to Kevin D. and
Margarita C. Castro. The parties acknowledge that the issue of
fiduciary fees will be determined in accordance with our holding
regarding the validity of the trusts.
At trial, the Castro & Co. Jewelers Trust (CCJT) conceded
respondent’s adjustment to taxes for 1996. The CCJT also agreed
to concede the adjustment to outside services for 1996 if we hold
that the CCJT is valid for Federal income tax purposes. If,
however, we hold that the CCJT is not valid for Federal income
tax purposes, then respondent concedes, for 1996, the adjustment
to outside services and an increase in depreciation in the amount
of $3,800.
Respondent proposed adjustments to the following items in
his notices of deficiency, and petitioners are deemed to have
conceded these adjustments because, although petitioners disputed
them in their petitions, petitioners failed to address them at
trial or on brief: The CCJT’s 1995 charitable contribution(s);
the Castro Family Trust’s (CFT) 1995 and 1996 charitable
contributions; and the CFT’s 1995 and 1996 “other deductions” and
“miscellaneous itemized deductions”, including medical,
utilities, automobile, meal, travel, and telephone expenses. See
Rule 151(e)(4) and (5); Petzoldt v. Commissioner, 92 T.C. 661,
683 (1989); Money v. Commissioner, 89 T.C. 46, 48 (1987). .
4The only other issues are computational.
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