-426-
Issue XIX. Whether the Kanters Are Entitled to an Interest
Deduction for 1986 (STJ report at 171-173)166
On Schedule E of their 1986 income tax return, the Kanters
claimed a $50,380 deduction for “interest computers”. Respondent
disallowed this deduction in the notice of deficiency.
OPINION
A. The Parties’ Arguments
Petitioners contend either (1) they should be allowed their
claimed interest deduction, or (2) the net income they reported
for 1986 from the related computer leasing activity should be
disregarded or eliminated. Petitioners argue on brief, in
pertinent part:
[In his proposed finding of fact], respondent
asserts that the * * * computer equipment leasing
deduction disallowed for 1986 is from the same Equitec
investment which was disallowed in the subsequently
issued notice of deficiency issued relative to * * *
[the Kanters’] 1984 year * * *. Both [the notice of
deficiency for 1984 and the notice of deficiency for
1986] * * * contain boilerplate language disallowing
Kanter’s computer leasing related interest deduction,
on a variety of grounds typically used to attack
perceived equipment leasing tax shelters. Most
significantly, * * * [respondent’s] notice of
deficiency claimed that Kanter failed to establish that
“the activity was entered into for profit or was
economically viable.” However, respondent’s notice of
deficiency for 1986, in contrast to the notice issued
to Kanter concerning this same investment for 1984,
fails to take into account (i.e., reverse) the rental
income reported from this computer equipment
transaction.
166 The Court’s disposition of this issue represents in
large measure a wholesale adoption of the recommended findings of
fact and conclusions of law set forth in the STJ report.
Page: Previous 416 417 418 419 420 421 422 423 424 425 426 427 428 429 430 431 432 433 434 435 NextLast modified: May 25, 2011