- 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
Last modified: May 25, 2011