Court Opinion

ID: 9473034
Source: CourtListenerOpinion
Date Created: 2023-08-05 04:17:32.625301+00
Date Added: 2024-06-11T17:43:16.945457
License: Public Domain

BEEZER, Circuit Judge,
dissenting in part:
I concur in the court’s opinion with respect to reducing the rent deduction taken by the taxpayers in an amount equal to gardening expenses and twenty-five percent of property taxes. These expenses are usually and customarily paid by landlords from the proceeds of rental income.
However, when the Tax Court reduced the rental deduction of Peck by twenty-five percent of the mortgage payments made by the taxpayers, it assumed that it was Leasing’s legal obligation to make those payments. There is no evidence in the record from which I can find that Leasing is under any obligation to assume or pay any portion of the mortgage. The Tax Court, in effect, has rewritten the agreement between Leasing and Peck to require Leasing to bear the burden of twenty-five percent of the mortgage payments on real property which it purchased for full and fair consideration. Concomitantly, the Tax Court has reduced the value of the Leasing common capital stock purchased by Peck in an amount equal to the shifted mortgage installments. This allocation between the taxpayers and their related corporation is totally unnecessary to place controlled taxpayers in the same position as uncontrolled taxpayers dealing at arms-length. To the extent that the Tax Court shifted the consequences of mortgage payments in the guise of an adjustment to fair market rental, I respectfully dissent.