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lease the containers. Pursuant to this agreement, GD&L was to
receive an annual lease management fee of $1 plus 15 percent of
the revenues generated by leasing petitioners' containers.
Petitioner does not recall making any payments on the promissory
notes nor for any management fees.
Petitioners received income and expense statements related
to their container leasing investment. Because petitioners did
not understand the documents, they took them to Lukensow for use
in the preparation of their tax returns.
On the Schedule E attached to their 1983 Federal income tax
return, petitioners reported ordinary losses of $33,758 from
Kathmar. On Form 3468 petitioners computed an ITC in the amount
of $20,000. Petitioners carried this $20,000 credit back to
taxable years 1980 and 1981 for refunds in the amounts of $8,698
and $11,311, respectively.
Based on Lukensow's advice, petitioners filed Form 4868,
Application for Automatic Extension of Time, on April 12, 1985,
for an automatic extension until August 15, 1985, to file their
1984 Federal income tax return. Petitioners gave Lukensow all
their tax papers, and he prepared the Form 4868. On that form,
petitioners estimated their 1984 Federal income tax liability to
be $5,077, of which $4,551 had been withheld by Mrs. McPike's
employer and a life insurance company. Petitioners filed Form
4868 and enclosed a check in the amount of $526. Thereafter,
they sent by certified mail their 1984 Federal income tax return
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