Alan G. Bone, Kathleen A. Bone, Jeffrey M. Guerrero, Genedine R. Guerrero v. Commissioner of Internal Revenue

ANDERSON, Circuit Judge:

Petitioners, Alan & Kathleen Bone and Jeffrey & Genedine Guerrero (hereinafter “Taxpayers”), challenge the decision of the United States Tax Court disallowing over $2 million in deductions taken in 1993 by their business, A.J. Concrete Services, an S corporation (“AJCS”). 1 These deductions related to expenses attributable to various long-term construction contracts that AJCS transferred to four related C corporations in January 1993. The Tax Court concluded that the deductions were impermissible because the expenses bene-fítted the C corporations, not AJCS, once the…