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1997. In that notice, respondent determined, inter alia, to
disallow the following deductions claimed in Delaware Corpora-
tion’s 1994 return: (1) Real estate taxes of $2,418 attributable
to the Caroline County farm, (2) real estate taxes of $2,963
attributable to the Virginia Beach property, (3) mortgage loan
interest of $29,820 attributable to the Caroline County farm,
(4) mortgage loan interest of $6,350 attributable to the Virginia
Beach property,10 (5) utility expenses of $8,847,11 (6) legal fees
of $17,807 attributable to the litigation with respect to the
10The parties stipulated that Delaware Corporation made for
1994, and deducted in its 1994 return, $44,170 of mortgage loan
payments with respect to the Caroline County farm and $18,627 of
mortgage loan payments with respect to the Virginia Beach prop-
erty. Delaware Corporation’s notice showed that for the taxable
year 1994 respondent disallowed $29,820 of mortgage loan interest
deductions with respect to the Caroline County farm and $6,350 of
mortgage loan interest deductions with respect to the Virginia
Beach property. The record does not disclose the reason for the
discrepancies between the respective total amounts of mortgage
loan payments that the parties stipulated Delaware Corporation
made during 1994, and deducted in Delaware Corporation’s 1994
return, with respect to the Caroline County farm and the Virginia
Beach property (i.e., $44,170 and $18,627, respectively) and the
respective total amounts of mortgage loan interest deductions
that respondent disallowed for that year with respect to those
properties (i.e., $29,820 and $6,350, respectively).
11In Delaware Corporation’s notice, respondent did not show
the disallowed portion of the total expense deductions of $8,847
for utilities that Delaware Corporation claimed in its 1994
return (1) that was attributable to the Caroline County farm and
(2) that was attributable to the Virginia Beach property. The
record establishes that Delaware Corporation paid during 1994
utility expenses of $2,917 attributable to the Caroline County
farm and $5,930 attributable to the Virginia Beach property.
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