- 6 -
period, petitioner filed Federal income tax returns, identifying
his occupation as "drilling contractor", with Schedule C forms
identifying the principal service as "drilling services," and the
business name as "De Boer Drilling Co." For the years 1985
through 1991, petitioner reported gross receipts, expenses, and
losses for De Boer Drilling Co., as follows:
Gross Net Profit
Tax Year Receipts Expenses Depreciation[5] (Or Loss)
1985 -0- $16,752 $23,957 ($40,709)
1986 $2,148 20,987 27,973 (46,812)
1987 8,280 12,834 25,356 (29,910)
1988 -0- 12,092 24,739 (36,831)
1989 -0- 31,994 17,738 (49,732)
1990 -0- 12,112 -0- (12,112)
1991 -0- 6,471 -0- (6,471)
Petitioner’s net loss for 1986 was shown on his 1986 return as a
net operating loss, for which he claimed a carryover deduction in
1991.
The gross receipts shown above for 1986 and 1987 resulted
from sales of metal well casing purchased by petitioner for
5Petitioner was still claiming depreciation deductions on
the first drill rig (on a straight-line basis over 10 years)
during this period. Depreciation deductions claimed by
petitioner with respect to the first drill rig and other
equipment purchased during the period 1978-81 and the second
drill rig and related equipment purchased in 1985 are as follows:
Depreciation
Tax Year First Drill Rig Second Drill Rig Total
1985 $9,514 $14,443 $23,957
1986 7,618 20,355 27,973
1987 5,618 17,738 23,356
1988 7,001 17,738 24,739
1989 0 17,738 17,738
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