Reference(s): 1974 P-H Fed. ¶7545(10). 4. BUSINESS EXPENSES—Proof in support of deduction—absence of satisfactory proof. Business expense deduction denied mortgage broker for secret payments to family that controlled bank from which he obtained loans for borrowers: payments [pg. 74-853]weren't ordinary and necessary expenses of his business. No proof why payments were made or that they were customary in banking industry. Reference(s): 1974 P-H Fed. ¶11,053(50). CAMPBELL v. COMM., Cite as 68 AFTR 2d 91-5425 (943 F2d 815), Code Sec(s) 83, (CA8), 08/27/1991 William G. CAMPBELL; Norma T. Campbell, APPELLANTS v. COMMISSIONER of Internal Revenue, APPELLEE. Case Information: [pg. 91-5425] Code Sec(s): 83 Court Name: U.S. Court of Appeals, Eighth Circuit, Docket No.: No. 90-2730, Date Decided: 08/27/1991 Prior History: ¶90,162 PH Memo TC (opinion by Scott, J.) affirmed in part and reversed in part. Tax Year(s): Years 1979, 1980. Disposition: Decision for Taxpayer in part and for Govt. in part. Cites: 68 AFTR 2d 91-5425, 943 F2d 815, 91-2 USTC P 50420. HEADNOTE 1. Profits interest acquired in exchange for services. Service partner wasn't taxable on profit interest he received for services in formation and syndication of limited partnership, which had no value at the time he received it. Tax court's valuation of interest was erroneous. It improperly disregarded expert's opinion that interest had only speculative value due to its restricted transferability, its subordinate rights to cash distributions and return of capital and its lack of management participation. Expert attached no value to projected tax benefits, which were based on untested position.
Reference(s): ¶ 7215.01(10) ; ¶ 835.02(5) . Code Sec. 83 ; Code Sec. 721 . Rev. Proc. 93-27, 1993-2 CB 343, 06/09/1993, IRC Sec(s). 721 IRS ADDRESSES TREATMENT OF PARTNERSHIP PROFITS INTEREST FOR SERVICES. Headnote: Rev. Proc. 93-27, 1993-24 I.R.B. __, 6/09/93 [CAUTION: This Rev Proc has been clarified by Rev Proc 2001-43, 2001-2 CB 191.] Reference(s): Code Sec. 721; The Service has issued a new revenue procedure explaining how a partnership profits interest received in return for services provided to, or for the benefit of, a partnership is to be treated for tax purposes. According to Rev. Proc. 93-27, the receipt of a partnership profits interest for services is not a taxable event so long as the person receives that interest either as a partner or in anticipation of becoming one. The new procedure does not apply, however, if (1) the profits interest relates to a substantially certain and predictable stream of income from partnership assets, such as income from high-quality debt securities or a high-quality net lease; (2) the partner disposes of the profits interest within two years of its receipt; or (3) the profits interest is a limited partnership interest in a publicly traded partnership under section 7704. .
- Spring '14
- Corporate Finance, Restricted stock, Concentrated stock