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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.
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Last modified: May 25, 2011