- 13 -
Other 1,800 --- ---
Depreciation 41,034 22,370 23,834
Total expenses $147,548 $79,845 $136,793
Net Loss ($102,548) ($33,045) ($32,243)
Loss claimed ($102,548) ($25,000) ($25,000)
For 1986 and 1987, the claimed losses relate solely to the
medical center. For 1988, the claimed loss includes $10,105 of
deductions for some undetermined rental activity. In her notice
of deficiency, respondent allowed petitioners deductions equal to
the gross income reported each year for the medical center.
OPINION
1. Preliminary Matters
Respondent on brief renews her objection to the admission
into evidence of a 1995 video tape. The tape was authenticated
at trial as representing the medical center's physical layout and
equipment during the years in issue. We hold the tape is
admissible.
Petitioner moved to dismiss the civil fraud addition to tax.
Our decision makes that motion moot.
2. Civil Fraud Issue
A. Parties' Positions
Respondent argues that Dr. Rao committed fraud in his
admitted failure to include all of his income from his psychiatry
practice. Respondent points out that Dr. Rao is a highly
educated businessman. Respondent argues that Dr. Rao reported
income only as reported on Forms 1099; lied to IRS agents about
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