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Business Partnership Adjusted
Year Income Losses Gross Income
1980 $ 80,034 $(197,975) $(117,849)
1981 115,099 (228,661) (229,807)
1982 136,596 (228,661) (318,667)
1983 92,259 (69,870) (294,885)
(The differences between the total of business income and
partnership losses reflected in the adjusted gross income figures
set forth above are attributable to a large net operating loss
carryover in 1983 and miscellaneous small items for the earlier
years.)
The partnership losses claimed on petitioners’ returns for
the years in issue were attributable to Mr. Barnhill’s investment
in an entity known as Winchester Oil and Gas Associates.
Mr. Barnhill did not consult with Mrs. Barnhill before he made
that investment, and she had no actual knowledge concerning the
investment. Winchester Oil and Gas Associates was part of a tax
shelter project commonly referred to as “Electra/Hemisphere”. In
a Stipulation of Settled Issues filed May 18, 1994, petitioners
conceded that they were not entitled to the net operating losses
claimed on their returns for the years in issue relating to
Winchester Oil and Gas Associates.
When the joint returns for the years in issue were presented
by Mr. Barnhill to Mrs. Barnhill for signature, she did not read
them or attempt to read them. Mr. Barnhill told her that she was
required by law to sign the returns, and he assured her that
there was nothing wrong with the returns. Mrs. Barnhill trusted
Mr. Barnhill to make wise decisions concerning financial and tax
matters.
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Last modified: May 25, 2011