John N. Shelton, Jr. - Page 6

               Petitioner’s uncontroverted testimony is credible, and we              
          find that he received rental income in 1994, 1995, 1996, and 1997           
          in the amounts of $2,400, $2,400, $3,000, and $3,000,                       
          respectively, and not the $5,000 amount for each year as                    
          determined in the notice of deficiency.                                     
               Section 212(2) allows as a deduction all ordinary and                  
          necessary expenses paid during the year for the management,                 
          conservation, or maintenance of property held for the production            
          of income.  A taxpayer is required to maintain records sufficient           
          to establish the amount of his income and deductions.  Sec. 6001;           
          sec. 1.6001-1(a), (e), Income Tax Regs.                                     
               At the conclusion of the trial, the Court held the record              
          open for the receipt of evidence substantiating expenses relating           
          to the rental property because petitioner failed to present any             
          documentation at trial.  The parties filed a supplemental                   
          stipulation of facts in which they stipulated that petitioner               
          paid the following amounts for mortgage interest:                           
                          Taxable Year                                                
               1994       1995         1996       1997                                
               Household Bank, FSB      $4,103.39   $4,193.91    $4,330.28     -0-    
          U.S. Dept. of HUD         5,983.39    6,444.88       -0-        -0-         
          Total                  10,086.78   10,638.79     4,330.28     -0-           
               Based on the supplemental stipulation of facts, petitioner             
          is allowed deductions for mortgage interest in these amounts for            
          the respective years.                                                       
               Based on the documentary evidence, attached as exhibits to             

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