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The parties settled the McMahon Litigation in 1988, and in
October of 1989, petitioner destroyed most of the underlying
documentation for its expenses from 1971 to 1984 or 1985.
Petitioner's management considered them old and irrelevant. But
it kept the checks for Sale By Owner and Far Western, reasoning
that those expenses were "more current". Petitioner also kept
its unaudited books of original entry, and other books based on
them. Since 1976, the first contested loss year, a member of the
Byrne family has kept the books of original entry. An accountant
compiled some of the other ledgers and journals using the
information the Byrnes gave him.
While prior years' events generate petitioner's claimed net
operating losses, including depreciation and interest, the events
of 1989 and 1990 generate petitioner's other claimed deductions.
Respondent conceded some of these current deductions, and of the
amounts remaining in controversy, respondent has admitted that
petitioner has substantiated the following amounts:
Category 1989 1990
Management fees of Byrne......... $500.00 $3,656.30
Fees/expenses of Charles Byrne III... 276.72 500.00
Repairs............................... 123.14 299.57
Insurance
for Automobile.................. 795.80 661.60
on Byrne's Life................. 1,114.10 -0-
Telephone.............................. 905.39 1,864.15
Travel................................ 48.77 -0-
Dues and subscriptions
Newspapers....................... 40.00 92.60
SF Commercial Club............... 75.17 65.00
Office expenses
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