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Following a concession by petitioner, the issues for decision
are: (1) Whether petitioner is entitled to deduct $47,405 as a
business foreclosure loss in 1986; (2) whether petitioner is
entitled to a dependency exemption for his companion, Florence H.
Ratliff, in 1986; (3) whether petitioner is entitled to a $17,769
net operating loss carryover from 1983, 1984, and 1986 to 1988; and
(4) whether petitioner is liable for section 6651(a)(1) additions
to tax for failure to timely file his 1986 and 1988 Federal income
tax returns.
All section references are to the Internal Revenue Code in
effect for the years in issue. All Rule references are to the Tax
Court Rules of Practice and Procedure.
FINDINGS OF FACT
Some of the facts have been stipulated and are found
accordingly. The stipulation of facts and the attached exhibits
are incorporated herein by this reference.
Background
At the time he filed his petition, Donald L. Head (petitioner)
resided in Arlington, Washington. Petitioner did not timely file
his 1986 and 1988 Federal income tax returns.
Petitioner was married to Diyana A. Head (Ms. Head). They
separated sometime in 1985 and divorced in March 1992.
The Jensen Road Property
In 1972, petitioner purchased property located at 2630 Jensen
Road in Bellingham, Washington (the Jensen Road property).
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