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decision is whether respondent may adjust petitioner's 1987
income under the mitigation provisions found in sections 1311 to
1315.
Background
This case was submitted fully stipulated under Rule 122.
The stipulation of facts and exhibits are incorporated herein by
this reference and found accordingly.
At the time the petition was filed in this case, petitioner
resided in Carson City, Nevada. Petitioner timely filed a
Federal income tax return for 1987, subsequent to a valid
extension, on July 18, 1988. Respondent mailed a statutory
notice of deficiency to petitioner on May 12, 1995, for the 1987
taxable year (the 1995 notice of deficiency).
During all relevant periods, petitioner was a cash-basis
taxpayer. During 1986, petitioner purchased an interest in
certain computer equipment for $135,000 cash and a note for the
balance of his $1,000,000 purchase price. The equipment was then
leased to a third party. Petitioner claimed deductible losses
from the leasing of the computer equipment (the computer leasing
deductions (CLDs)) in the following amounts:
Year Amount
1986 $200,250
1987 321,002
1988 51,972
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