- 6 -
The Morrows reported the income and expenses of I.D.F. Pest
Control Co. from January 1 to September 30, 1996, on Schedule C,
Profit or Loss From Business, of their jointly filed Form 1040,
U.S. Individual Income Tax Return. Subsequent to October 1,
1996, the trust reported the income and expenses of I.D.F. Pest
Control Co. on Schedule C of its Form 1041, U.S. Income Tax
Return for Estates and Trusts. The trust reported no taxable
income in either 1996 or 1997 because its net income from the
pest control business operations was deducted as an income
distribution deduction and reported as such on a Schedule K-1,
Beneficiary’s Share of Income, Deductions, Credits, etc., to
Charlotte Morrow as the beneficiary. Charlotte Morrow reported
the income distribution from the trust on Schedule E,
Supplemental Income and Loss, Part III, Income or Loss From
Estate and Trusts, of the Morrows’ jointly filed Federal
individual income tax return.
Peter Morrow owned the equipment used in the pest control
business. Lease payments in the amount of $8,600 per year were
reported as income by the Morrows on Schedule C of their jointly
filed 1997 Form 1040 and were claimed as an expense on the
trust’s Schedule C of its 1997 Form 1041. No lease agreement was
executed. No payments were made by the trust to Peter Morrow for
use of the equipment. The handling of the equipment lease
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 Next
Last modified: May 25, 2011