Gail Marie Harmon - Page 3




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          effect for the year in issue, and all Rule references are to the            
          Tax Court Rules of Practice and Procedure.                                  
               Respondent determined a deficiency in petitioner’s Federal             
          income tax of $2,621 for the taxable year 1996.                             
               The issue for decision is whether petitioner is entitled to            
          various rental activity expense deductions and miscellaneous                
          itemized deductions which were disallowed by respondent.                    
               Some of the facts have been stipulated and are so found.               
          The stipulations of fact and the attached exhibits are                      
          incorporated herein by this reference.  Petitioner resided in               
          Livermore, California, on the date the petition was filed in this           
          case.                                                                       
               For the taxable year in issue, petitioner filed with her               
          Federal income tax return a Schedule E, Supplemental Income and             
          Loss, for two rental properties.  In the statutory notice of                
          deficiency, respondent determined that petitioner was not                   
          entitled to deduct a portion of the expenses claimed with respect           
          to these rental properties, as detailed below, because it had not           
          been established that any of the amounts disallowed both were               
          paid during the taxable year and were ordinary and necessary                
          business expenses.  The rental activity expenses which remain at            
          issue1 are the following:                                                   

          1Respondent has conceded the notice of deficiency’s                         
          adjustment to automobile and travel expenses with respect to the            
                                                             (continued...)           





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