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unfavorable. Recklitis v. Commissioner, 91 T.C. 874, 890 (1988);
Pollack v. Commissioner, 47 T.C. 92, 108 (1966), affd. 392 F.2d
409 (5th Cir. 1968); Wichita Terminal Elevator Co. v.
Commissioner, supra at 1165.
Assuming arguendo that the payments were made, and from
petitioner’s personal account, it is not clear that the payments
were not moneys paid to Mark Tietig’s attorneys by petitioner as
the result of the settlement agreement executed in 1992.
Payments made for this purpose have not been shown to be
deductible. We hold that petitioner is not entitled to the
$32,241 deduction.
II. Issue 2. Farm & Grove’s Sale of 53 Lots in 1990
A. Background
Farm & Grove reported $249,723 in gross income on its 1990
Form 1120S, U.S. Income Tax Return for an S Corporation.
In a series of transactions between 1981 and the end of
1990, Farm & Grove acquired a large inventory of unimproved land
lots in Brevard County, Florida. Included in the series was Farm
& Grove’s 1987 acquisition of a fee simple interest in 539 lots
in the Cape Kennedy Estates real estate development from the
Atlantic Ridge Corp. for a purchase price of $317,272.
On December 30, 1990, Farm & Grove transferred equitable
title of 53 of the Brevard County lots to the Kiddies 38
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