-21-
returns reports that Funny Hats’ principal business activity was
“rental” and that its principal product or service was “real
estate”. None of those returns reports any rent for those years.
The 2001 return reports that Funny Hats realized $277 of interest
income during 2001 and was entitled to claim $1,153 in
“miscellaneous” deductions. The 2002 return reports that Funny
Hats realized $47 of interest income during 2002 and was entitled
to claim $843 in “miscellaneous” deductions. The 2003 return
reports that this return was a final return and that Funny Hats
had realized $29 of interest income during 2003.
13. Estate Tax Return and Notice of Deficiency
On or about May 3, 2001, Martha Johnson filed a Federal
estate tax return for decedent’s estate. The return reports in
part that decedent’s estate owes Funny Hats $8,500 for the
“Balance of annual rent due pursuant to lease agreement” and that
decedent’s estate incurred a $6,000 expense for the “Clean out
and removal of property re: Decedent’s home”. By notice of
deficiency dated February 10, 2004, respondent determined the
estate tax deficiency in issue. The parties now agree that
decedent’s estate is not entitled to deduct any of the $8,500 as
rent payable to Funny Hats and that decedent’s estate is entitled
to deduct only $342.04 as a cleaning expense.
Page: Previous 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 NextLast modified: May 25, 2011