J.J. Zand - Page 16

                                        - 105 -                                       

          1972, through March 21, 1973, petitioner reported 100 percent               
          ownership of Diesel Power's voting stock on an Information Return           
          with Respect to Controlled Foreign Corporation (Form 2952) filed            
          with the Internal Revenue Service. Diesel Power's foreign                   
          commission deposits from the Bank of America in New York City,              
          combined with the retained earnings and amounts due shareholders            
          on the Diesel Power financial statements, show that during its              
          fiscal year ending March 20, 1975, retained earnings and profits            
          exceeded $5 million.                                                        
                    VI.  Claimed Capital Losses for 1978 and 1979                     
               Petitioner claimed capital losses for 1978 and 1979.  On his           
          1978 Federal income tax return petitioner reported a short-term             
          capital loss of $15,767 from the sale of commodity futures.  He             
          deducted $3,000 of the reported loss and carried over to his 1979           
          return a loss of $12,767.  For 1979 he applied the short-term               
          capital loss carryover of $12,767 against a short-term capital              
          gain of $7,500.  In 1979 he also reported a net long-term loss of           
          $8,229 from small business corporations.  He deducted $3,000 of             
          the claimed net losses in 1979.                                             
               In the notice of deficiency for 1978 and 1979 respondent               
          disallowed the claimed losses and determined that petitioner was            
          required to include the $7,500 short-term gain in his 1979                  
          taxable income.  Respondent disallowed the losses because                   
          petitioner did not establish that they were incurred, nor did               





Page:  Previous  95  96  97  98  99  100  101  102  103  104  105  106  107  108  109  110  111  112  113  114  Next

Last modified: May 25, 2011