- 33 -
the substantiation requirements of section 274 to establish his
automobile mileage. Accordingly, petitioner is allowed a
miscellaneous itemized Schedule A deduction in the amount of
$780, subject to the overall 2-percent of adjusted gross income
limitation.
D. Loan Interest
Pursuant to section 163(a), interest is deductible.
However, personal interest generally is not deductible.
Sec. 163(h). Debt arrangements between family members are
subject to a high level of scrutiny. Zohoury v. Commissioner,
T.C. Memo. 1983-597. The following factors are used to
scrutinize intrafamily loans: (1) Whether a specific rate of
interest is charged to the taxpayer for the use of the money;
(2) whether there is a specific date for repayment; (3) whether
there is a written instrument evidencing the debt; (4) whether
there is a legitimate purpose for obtaining the loan; (5) whether
the taxpayer intended to repay the debt; (6) whether the relative
receiving the payments on the loan was impecunious; and
(7) whether the loan has economic substance. Id.
19(...continued)
Petitioner’s 18,200 claimed business miles multiplied by the
business standard mileage rate of 32.5 cents totals $5,915. See
id. secs. 5.01 and 5.02, 1999-2 C.B. at 526-527. The Court
concludes that petitioner’s calculations do not comply with Rev.
Proc. 99-38, 1999-2 C.B. 525.
Page: Previous 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 Next
Last modified: November 10, 2007