Michael Gatto Philip Gatto, Stephanie Gatto v. Commissioner of Internal Revenue

HUG, Circuit Judge:

Michael, Philip, and Stephanie Gatto appeal the Tax Court’s denial of two income tax deductions which they had claimed for the 1980, 1981 and 1982 tax years: (I) a deduction under 26 U.S.C. § 163 for interest on loans which had been granted to the Gattos by trusts of their own creation, and (II) a deduction under 26 U.S.C. § 174 for research expenditures incurred by certain research and development partnerships in which they were limited partners. We have jurisdiction under 28 U.S.C. § 1291 and we affirm.

I

THE INTEREST DEDUCTIONS

In December, 1981, Michael Gatto created a…