DKD Enters. v. Comm'r of Internal Revenue, No. 11-2528 (8th Cir. 2012)
Annotate this CaseThe United States Tax Court assessed income tax deficiencies and penalties against DKD Enterprises, Inc. (DKD) and Debra Dursky for the years 2003 to 2005. The Eighth Circuit Court of Appeals (1) affirmed the tax court's decisions that (i) DKD's cattery operations were not legitimate trade or business expenses under 26 U.S.C. 162(a), (ii) funds spent by DKD to operate the cattery were taxable to Dursky as a constructive dividend, and (iii) funds spent by DKD in payment of Durksy's health insurance plan were not a deductible accident or health plan under 26 U.S.C. 106(a) nor an excludable ordinary and necessary business expense under section 162(a); (2) reversed the tax court's decisions that DKD's contributions to the profit-sharing pension plan for two 2003 and 2004 did not qualify for a 26 U.S.C. 401 and 501 deduction; and (3) remanded for further consideration as to (i) whether DKD's 2006 contribution to the profit-sharing pension plan qualified for the 401 and 501 deduction in tax year 2005, and (ii) whether that distribution was taxable to Dursky as a constructive dividend.
Court Description: Civil case - Federal Tax. The Tax Court's findings: (1) that DKD's cattery operation costs were not legitimate trade or business expenses under 26 U.S.C. Sec. 162(a); (2) that funds spent by DKD to operate the cattery were taxable to Dursky, its owner, as a constructive dividend; and (3) that funds spent by DKD to pay Dursky's health insurance were not a deductible accident or health plan under 26 U.S.C. Sec. 106(a) or an excludable ordinary and necessary business expense under 26 U.S.C. Sec. 162(a) are affirmed. The Tax Court's decisions that DKD's contributions to a profit-sharing pension plan for 2003 and 2004 did not qualify for the 26 U.S.C. Sec. 401 and Sec. 501 deduction are reversed; the case is remanded to the Tax Court for further consideration of whether DKD's 2006 pension plan contribution qualified for the deduction in the 2005 tax year and whether that distribution is taxable to Dursky.
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.