James E. Redlark and Cheryl L. Redlark - Page 2

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               Clare Golnick, for petitioners.                                        
               Paul L. Dixon, for respondent.                                         

                                       OPINION                                        
               TANNENWALD, Judge:  Respondent determined deficiencies in              
          petitioners' 1989 and 1990 Federal income taxes in the amounts of           
          $46,409 and $6,927, respectively.  The issue in dispute is                  
          whether petitioners may deduct certain interest on Federal income           
          tax deficiencies, paid by petitioners in 1989 and 1990, where the           
          deficiencies arose in part due to a correction for errors made in           
          computing petitioners' income from their business.                          
               All the facts have been stipulated.  The stipulation of                
          facts and attached exhibits are incorporated herein by this                 
          reference.                                                                  


          Background                                                                  
               At the time the petition was filed, petitioner James E.                
          Redlark was a resident of Palm Springs, California, and                     
          petitioner Cheryl L. Redlark was a resident of South Lake Tahoe,            
          California.                                                                 
               Respondent examined petitioners' Federal income tax returns            
          for 1979, 1980, 1981, 1982, 1983, 1984, and 1985, following which           
          respondent and petitioners agreed to adjustments to petitioners'            
          income for each of the years.                                               
               The adjustments were due in part to a correction for errors            
          made in converting petitioners' revenue from Carrier                        
          Communications, petitioners' unincorporated business, from an               




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