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Eva's Claimed $20,678 NOL Re: Oil Production
With petitioners' 1986 joint Federal income tax return, Eva
filed a Schedule C claiming a net operating loss from oil
production of $20,678. On audit, respondent disallowed this
claimed loss on the grounds that no portion thereof had been
substantiated.
At trial, petitioners offered documentation in support of
claimed oil production expenses that indicates that many of the
purported expenses reflected on the Schedule C relate to the
business of L & L Supply. Accordingly, the claimed expenses
may already have been claimed by L & L Supply on the Schedule C
relating to that separate business. Further, based on the
referred-to documentation, $12,000 of the expenses giving rise
to the claimed $20,678 loss from oil production appear to
constitute a payment to G.R. Penn Production Co., a company
controlled by petitioners' son, and $5,000 of the claimed
expenses appear to represent not expenses, but rather receipts
or income petitioners received from G.R. Penn Production Co.
We disallow Eva’s claimed $20,678 net operating loss for
1986 relating to oil production.
Additions To Tax
Petitioners have offered no credible excuse for the late
filing of their 1985 and 1986 joint Federal income tax returns.
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