John Franklin Foust - Page 9

                                        - 9 -                                         

          years.  Cheyenne did not report the $43,496 FCI payment on its              
          1989 Form 1120S.                                                            
               On July 28, 1989, petitioner purchased 19 cashier’s checks             
          in the total amount of $183,000 from Valley National Bank, Des              
          Moines, Iowa.5  Petitioner deposited 11 of these checks, totaling           
          $110,000, into the bank account of Iowa Prairie.                            
               Cheyenne’s 1989 Form 1120S reported “no activity” and showed           
          no income or expenses.  Nonetheless, petitioner claimed a current           
          net operating loss flowthrough from Cheyenne in the amount of               
          $11,503.  Petitioner claims to have paid personally $110,000 to             
          Mesa and Teton for rental expenses that Cheyenne was unable to              
          pay.  Petitioner claimed a deduction for those alleged payments             
          on his 1989 Federal income tax return.                                      
               Petitioner was aware that he was required to maintain                  
          records sufficient to support the positions taken on his Federal            
          income tax returns.  Nonetheless, petitioner did not retain                 
          receipts of transactions, maintain books of account, or prepare             
          financial statements for himself or any of the corporate entities           
          in which he had an interest.                                                

               5 Petitioner received a “contract settlement” in 1989 in the           
          amount of $183,000, which he reported as income on his 1989                 
          return, in connection with the termination of his employment as             
          Vice President of Financial Affairs and Chief Financial Officer             
          of the University of Osteopathic Medicine & Health Sciences of              
          Des Moines, Iowa.  However, the record does not disclose any of             
          the facts surrounding the contract settlement, nor whether the              
          $183,000 was used to purchase the cashier’s checks.                         

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  Next

Last modified: May 25, 2011