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Loss From Business, of their 2001 return, and (2) if petitioners
are entitled to deduct the expenses, whether the expenses are
subject to the 2-percent limitation contained in section 672 and
the limitation contained in section 68.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated herein by this reference. At the time they filed
the petition, Ronnie O. Craft (petitioner) and G. June Craft,
husband and wife, resided in Garland, Texas. G. June Craft is a
party because she signed the joint tax return.
Petitioner is a 50-percent shareholder in Craft-Barnett
Investments, Inc. (Craft-Barnett), an S corporation which was
converted from a C corporation in 1994. James M. Barnett
(Barnett) is the other 50-percent shareholder of Craft-Barnett.
Both petitioner and Barnett, in their capacity as officers and
employees, received a salary of $50,000 from Craft-Barnett in
2001.
Petitioner is also a shareholder in Abilene Investment
Properties, Inc., a family-owned S corporation. In addition,
petitioner is a partner in the ROC Family Limited Partnership
(ROC FLP) along with his wife and children. ROC FLP owned the
2 Unless otherwise indicated, all section references are to
the Internal Revenue Code (Code) in effect for the year in issue,
and all Rule references are to the Tax Court Rules of Practice
and Procedure.
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