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Mitchums Creek property, (7) telephone expenses of $2,700,12
(8) child care expenses of $7,762, and (9) depreciation of
$10,909 attributable to the Virginia Beach property. In Delaware
Corporation’s notice, respondent also determined that the 1994
claimed rent of $7,200 should not be included in Delaware Corpo-
ration’s gross income for 1994.
In Delaware Corporation’s notice, respondent determined,
inter alia, to disallow the following deductions claimed in
Delaware Corporation’s 1995 return: (1) Real estate taxes of
$2,963 attributable to the Virginia Beach property, (2) mortgage
loan interest of $11,676 attributable to the Virginia Beach
property,13 (3) utility expenses of $1,777 attributable to the
12In Delaware Corporation’s notice, respondent did not show
the disallowed portion of the total telephone expense deductions
of $2,700 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
telephone expenses of $312 attributable to the Caroline County
farm and $1,682 attributable to the Virginia Beach property.
Although the record is not clear regarding the property or
properties to which the remaining expenses of $706 are attribut-
able, the parties do not dispute that for 1994 the total tele-
phone expense deductions in dispute are $2,700.
13The parties stipulated that Delaware Corporation made for
1995, and deducted in its 1995 return, $18,649 of mortgage loan
payments with respect to the Virginia Beach property. Delaware
Corporation’s notice showed that for the taxable year 1995
respondent disallowed $11,676 of mortgage loan interest deduc-
tions with respect to that property. The record does not dis-
close the reason for the discrepancies between the total amount
of mortgage loan payments that the parties stipulated Delaware
Corporation made during 1995, and deducted in Delaware Corpora-
(continued...)
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