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Petitioners lived in the Tanglewood home in 1987 and 1988.
Petitioners spent $15,000 to improve that home while petitioner
wife owned it. On August 2, 1988, petitioner wife sold it for
$237,000. Petitioner wife had sales expenses of $561. Her cost
basis in the house was $210,691.
On February 22, 1989, petitioner wife bought a lot at 41741
Alden, Clinton Township, Michigan, for $35,000. Canta built a
residence on this lot in 1989. Petitioner wife bought the
residence on October 12, 1989, for $160,000.
9. Petitioners' Returns
H & R Block prepared petitioners' 1987 and 1988 returns.
Petitioner husband gave H & R Block various documents to prepare
those returns. For the 1988 Schedule C, he gave H & R Block only
his real estate commission receipts totaling $15,480 as shown on
a Form 1099. He did not give them records of commission checks
that he cashed before depositing, records of corporate payment of
petitioners' personal expenses, or records of commissions
petitioner husband received that were payable to another entity.
Petitioners did not review the returns before signing them.
They did not claim all of their exemptions for 1987.
Gerald Carnago, of Carnago, Neddermeyer & Bringard, prepared
petitioners' 1989 return. Petitioners filed their returns for
1987 on April 25, 1988, for 1988 on September 5, 1989, and for
1989 on October 23, 1990.
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