2
Petitioners Leonard L. and Joyce S. Leighton were residents
of San Antonio, Texas, in the years 1987 and 1988, and at the
time the petition was filed in this case. For those years, they
filed joint income tax returns on the cash basis. Hereinafter,
references to petitioner are to Leonard L. Leighton.
The issues we must decide in this case are: (1) Whether
respondent erred in determining that petitioners had unreported
ordinary income in 1987 of $762,685; (2) whether respondent erred
for 1987 in determining that petitioners had unreported net
capital gains of $653,787; and (3) whether petitioners had net
capital losses in excess of any reportable capital gains for
1987. Minor additional adjustments to income, as well as
additions to tax for each year for negligence and for substantial
understatement of tax under sections 6653 and 6661, were raised
as issues in the petition herein, but were never mentioned by
petitioners thereafter, either at trial or on brief, and are
deemed to be conceded. See Rule 151.
Petitioner is a practicing attorney at law in San Antonio,
Texas, having received his license to practice in 1961, and he
also holds a masters in taxation degree from New York University.
He has taught law at the law school at St. Mary's University. At
least since 1981, petitioner has been a partner in a law firm in
San Antonio, Texas, and Mrs. Leighton has worked for such firm as
a secretary. Petitioner was principal partner of and held a
controlling interest in said law firm from 1981 through 1988, and
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