- 8 - A itemized deductions rather than Schedule C deductions. Petitioner deducted the aforementioned expenses on Schedule C of their 1986 return because Schedule C provided them with greater tax savings. Respondent determined that petitioners underreported their income during each of the years in issue by: (1) Underreporting petitioner's masonry business receipts; (2) inflating business deductions; and (3) changing Schedule A deductions to Schedule C expenses. 1985 Loan Application In 1985, petitioner applied for a loan at the First American Savings and Loan Association (First American). On the application form, petitioner listed his income as $4,000 a month. He listed $118 of monthly inheritance interest, and reported cash assets of approximately $40,000. The inheritance interest income was not reported on petitioners' Federal income tax returns for the years under consideration. Petitioners' 1983 and 1984 tax returns were attached to the bank loan application. First American denied petitioner a loan. Petitioner wrote a letter to First American following the denial of the loan. In the letter, he provided First American with profit information for the first eight months of 1985. He reported gross profit of $57,566 and net profit of $36,788. Petitioner obtained these figures using his brown books.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
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