- 3 - maintained the residence as their homestead. Petitioners financed the purchase of the real property with a bank loan in the amount of $299,000. On their 1990 and 1991 Forms 1040, U.S. Individual Income Tax Returns, petitioners claimed Schedule A mortgage interest deductions of $32,450 and $34,636, respectively, for interest paid on the real property loan. The correct amounts of interest paid on the real property loan were $5,000 for 1990 and $28,067 for 1991. On their 1990 and 1991 Forms 1040, petitioners claimed Schedule A real property tax deductions of $2,500 and $2,056, respectively, for taxes paid on the real property. The correct amounts of real property taxes paid were $2,377 for 1990 and $232 for 1991. During 1990, Mr. Mitchell had a business loan with Groos Bank. On Schedule C to their Form 1040 for 1990, petitioners claimed interest expense of $9,600 in relation to the Groos Bank loan. The correct amount of interest expense for 1990 on this loan was $1,399. On June 1, 1990, petitioners filed a voluntary chapter 11 petition in bankruptcy. No tax returns were ever filed for the bankruptcy estate. In a Second Amended Disclosure Statement filed in the bankruptcy proceeding February 1, 1991, petitioners represented that the filing of the bankruptcy petition was required by the scheduled foreclosure sale on their real property. They also asserted the following:Page: Previous 1 2 3 4 5 6 7 8 Next
Last modified: May 25, 2011