Larry D. & Marie A. Land - Page 7




                                        - 6 -                                         

          produce, grains, and other products you raised".  Respondent                
          determined that the $12,000 installment payment should not have             
          been reported on Schedule F, but it should have been reported on            
          Schedule D as capital gain income of $6,619.  Petitioner appeared           
          to agree to this adjustment.  We sustain respondent’s                       
          determination.                                                              
               Respondent also disallowed $11,561 of the deductions on                
          petitioners' Schedule F.  The deductions consist of $10,600 of              
          legal fees, $100 of accounting fees, $3 for office expense, $434            
          of telephone expense, $224 of miscellaneous expense, and $200 of            
          other interest expense.  Respondent contends that the expenses              
          are not farm expenses and that the majority of the expenses are             
          personal expenses.  Aside from the legal fees, petitioners did              
          not substantiate the remaining $961 of claimed expenses.                    
               Petitioner has been engaged in a law suit against the United           
          States for damage done to his cattle and family when the U.S.               
          Army allegedly disposed of nerve agents into the water supply of            
          the farm.                                                                   
               Respondent concedes that petitioners paid $10,600 of legal             
          expenses in 1995 in connection with the lawsuits.  Respondent               
          contends that the lawsuits were principally for personal injuries           
          suffered by petitioner and his family, and that the legal fees              
          would not be deductible because any recovery from the lawsuits              
          would be nontaxable under section 104.                                      








Page:  Previous  1  2  3  4  5  6  7  8  9  Next

Last modified: May 25, 2011