Francis J. Dirico and Jennifer Dirico v. Commissioner

Halpern, Judge:

By notice of deficiency respondent determined deficiencies in petitioners’ Federal income tax liabilities of $69,910 and $216,845 for their 2004 and 2005 taxable, calendar, years (years in issue), respectively.

Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the years in issue. All dollar amounts have been rounded to the nearest dollar.

The issues for decision are (1) whether rental income paid to Francis J. Dirico (petitioner), or to one of his wholly owned grantor or nominee trusts, by his wholly owned subchapter S corporation…