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improvements. Petitioner resided in the Solomons house from 1986
until February 1989 and paid no rent. From time to time,
Solomons business was conducted in the Solomons house. Solomons
owned the house and pledged it, along with the other partnership
property, as collateral for loans obtained by the partnership.
From 1986 to 1988, Solomons purchased additional adjacent
property. The total acreage acquired by Solomons was 18.9339
acres.
In February 1989, Solomons sold the 18.9339 acres of land,
including the house that was occupied by petitioner, for
$5,315,000. The Solomons house was destroyed by fire in February
1989.
On February 24, 1989, petitioner and another person
purchased a new home in St. Mary's County, Maryland, for
$158,000.
Other Background
Petitioner prepared Allied's 1988 and 1989 Federal income
tax returns. Petitioner prepared his own 1988 Federal income tax
return. Petitioner's 1989 Federal income tax return was prepared
by Clarkson Richard Sherwood (Sherwood), an accountant.
OPINION
Allied's Gross Income and Deductions
Allied contends that respondent's determination of Allied's
gross income should be reduced by $2,850 and $14,175 in 1988 and
1989, respectively.
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