- 39 -
expenditures”. Respondent, nevertheless, allows petitioner to
offset LFI’s income with LFI’s expenses for 1991 and 1992, but
not for 1989 or 1990.
Petitioner contends that, although legal title to Granot
Loma was never transferred to LFI, LFI owned a beneficial and
depreciable interest in the property and that LFI should be
allowed to deduct depreciation to the extent provided in section
183(b)(2). Petitioner relies on several cases for the
proposition that command over property or enjoyment of its
economic benefits marks the real owner for Federal tax purposes.
See Speca v. Commissioner, 630 F.2d 554, 557 (7th Cir. 1980)
(quoting Anderson v. Commissioner, 164 F.2d 870, 873 (7th Cir.
1947)), affg. T.C. Memo. 1979-120; Hang v. Commissioner, 95 T.C.
74, 80 (1990). Petitioner, however, has failed to convince us
that LFI owned any beneficial interest in Granot Loma. The
record instead persuasively establishes that petitioners
personally controlled, used, and enjoyed Granot Loma throughout
the years at issue.
Regarding LFI’s other deductions, petitioner did not address
respondent’s argument that those deductions were unsubstantiated.
Ordinarily, a taxpayer is required to substantiate claimed
deductions. See sec. 1.6001-1(a), Income Tax Regs. In this
case, the parties did not stipulate that LFI incurred any
expenses and because petitioners introduced no evidence at trial
to prove the nature and amount of LFI’s expenses, we would
Page: Previous 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 NextLast modified: May 25, 2011