Forest L. Buckmaster - Page 5

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            contractor's license for the floor installation work completed by                            
            petitioner during 1992 was in petitioner's name only.                                        
                  Petitioner and Sheila Webb (Webb), his friend and long-time                            
            roommate, lived in San Diego in 1992 at a house (the residence)                              
            which petitioner's father had transferred to them in 1984.  Webb                             
            wrote Ideal Management monthly checks of $500 for petitioner's                               
            "rent" of the residence during that year, drawable on an account                             
            (the joint account) held jointly with petitioner, and the checks                             
            were deposited into an account of Ideal Management (the Ideal                                
            Management account) over which petitioner and Webb had signature                             
            authority.  Ideal Management used petitioner's "rent", as well as                            
            the money received from petitioner's services, to pay the                                    
            residence's property taxes, mortgage, and other expenses.  Ideal                             
            Management also used these moneys to pay the expenses that                                   
            petitioner purportedly incurred installing floors.                                           
                  Ideal Management's 1992 tax return, Form 1041 (U.S.                                    
            Fiduciary Income Tax Return), reported depreciation for the                                  
            residence and assets that petitioner had originally transferred                              
            to Ideal Management.3  Ideal Management's 1992 Form 1041 also                                
            claimed deductions (e.g., mortgage, insurance, repairs,                                      
            utilities) totaling $17,788 for the residence and $40,503 of                                 
            expenses (including $18,318 for the cost of goods sold) connected                            
            with petitioner's floor installation.  Ideal Management's 1992                               

                  3 Ideal Management began depreciating the residence in 1990,                           
            claiming a basis therein of $135,000.                                                        

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