- 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