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administrative costs pursuant to section 74301 and Rule 231. On
November 24, 2003, this Court issued its memorandum opinion in
Demetree v. Commissioner, T.C. Memo. 2003-323. We incorporate
herein the facts set forth in that opinion.
Background
From 1983 through 1991, David’s parents, Arthur and Naomi,
regularly gave petitioners and their children gifts including
food, property, and money (e.g., groceries, two homes, $900,000
in trust for David’s children, etc.). David’s parents and his
sister, Ms. Hinkle, also made substantial loans, documented by
promissory notes, to David. When David failed to repay the
loans, his parents and sister obtained judgments against him.
From the early 1970s through his death in 1991, Arthur
operated Demetree and Associates, a commercial property
management sole proprietorship. From 1983 to 1991, David
occasionally performed services for Demetree and Associates and
David signed Arthur’s name on Demetree and Associates’ business
deposit slips and checks (e.g., checks payable to himself or to
third parties). Arthur did not deduct the amounts he transferred
to David; issue David Forms W-2, Wage and Tax Statements; or
issue Forms 1099-MISC, Miscellaneous Income.
1 Unless otherwise indicated, all section references are to
the Internal Revenue Code of 1986, as amended, and all Rule
references are to the Tax Court Rules of Practice and Procedure.
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Last modified: November 10, 2007