2
After concessions, the issues for decision are:
(1) Whether petitioners had enough of a basis in Bob Wade
Ford, Inc. (Bob Wade Ford), to deduct losses of $256,752 in 1988
and $133,709 in 1989, as petitioners contend; had a zero basis,
as respondent contends; or had a basis of some other amount; and,
if petitioners establish that they had enough of a basis to
deduct losses, whether passive loss limitations apply. We hold
that, after applying the passive loss limitations, petitioners
may deduct $50,000 in 1988 and $52,692 in 1989.
(2) Whether petitioners' net capital gains were $227,720
for 1988 and $244,489 for 1989, as petitioners contend, or
$257,720 for 1988 and $274,489 for 1989, as respondent contends.
We hold that petitioners' net capital gains were $257,720 for
1988 and $274,489 for 1989.
(3) Whether petitioners may carry forward net operating
losses of $2,512,307 for 1988 and $2,401,099 for 1989. We hold
that they may not.
(4) Whether petitioners may deduct expenses relating to a
dirt fill operation of $127,985 for 1988 and $135,824 for 1989.
We hold that they may not.
(5) Whether petitioners may claim a general business credit
carryforward of $27,548 for 1988 and 1989. We hold that they may
not.
(6) Whether petitioners are liable for the addition to tax
for substantial understatement of income tax under section 6661
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