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Respondent determined deficiencies in petitioners’ Federal
income taxes, additions to tax, and accuracy-related penalties as
follows:
Sec. Sec.
Year Deficiency 6651(a)(1) 6662(a)
1996 $12,707 $920.25 $2,541.40
1997 742 234.00 148.40
1999 5,222 --- 1,044.40
After concessions by the parties, the issue for decision by
the Court is whether petitioners properly elected, under section
172(b)(3), to waive the carryback of a net operating loss (NOL)
from 1995.
Background
Some of the facts have been stipulated, and they are so
found. At the time that the petition was filed, petitioners
resided in San Francisco, California.
During 1995, because of a downturn in the economy,
petitioners incurred significant financial losses with respect to
their real estate activities. Properties used by petitioners in
their real estate activities were subject to possible
foreclosure. Petitioners were also being sued by their financial
institution.
Using tax software, Harold Silk (hereinafter referred to as
petitioner) prepared what, at best, may be described as a 10-page
“draft income tax return” for the 1995 taxable year (the so-
called draft return). Petitioner allegedly mailed the so-called
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Last modified: May 25, 2011