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transferred funds to pay personal living expenses. Ms. Davis
received no other compensation from Flair. In the notice of
deficiency, respondent treated these deposits as wages to Ms.
Davis, deductible by Flair.
Unexplained Deposits
During the taxable years 1990 and 1991, Ms. Davis deposited
$59,582 and $54,612, respectively, into her personal bank account
at First Enterprise Bank. Ms. Davis' deposits into First
Enterprise Bank, Oklahoma City, Oklahoma, included the $45,325
from Flair for the year 1990 and the $47,550 from Flair for the
year 1991.
Country Club Properties
Ms. Davis' individual Federal income tax returns for the
taxable years 1986 and 1987 included her distributive share of
losses from a partnership, Country Club Properties (Country
Club). Ms. Davis' individual Federal income tax return for the
taxable year 1988 did not include her distributive share of
ordinary losses from Country Club.
Ms. Davis' distributive share of ordinary losses, net
section 1231 gains, and income from discharge of indebtedness
from Country Club for the year 1989 was:
Net loss from rental real estate operations ($32,691)
Net section 1231 gain 103,246
Income from discharge of indebtedness 240,598
Ms. Davis' individual Federal income tax return for the year 1989
did not include the above items.
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