French E. Hickman and Janice C. Hickman - Page 8

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          ducted in their respective returns for 1991, 1992, and 1993 only            
          a portion of the total amounts of investment interest claimed in            
          their respective Forms 4952 for those years.  Pursuant to section           
          163(d)(2), they treated the balance of the total amount of                  
          investment interest claimed in Forms 4952 for each of the years             
          1991 and 1992 as disallowed investment interest to be carried               
          over to the succeeding taxable year.                                        
               In Schedules A, Itemized Deductions (Schedule A), of their             
          returns for 1991, 1992, and 1993, petitioners claimed total                 
          interest deductions of $179,235, $141,388, and $96,901, respec-             
          tively.  Those deductions consisted of the following claimed                
          amounts of interest for the taxable years indicated:                        
                                Claimed                                               
                Taxable      Home Mortgage             Claimed                        
                Year      Interest and Points    Investment Interest                  
                 1991          $22,527                 $156,708                       
                 1992          19,280                  122,108                        
                 1993          15,744                  81,157                         

               In Schedule D, Capital Gains and Losses (Schedule D), of               
          their 1992 return, petitioners claimed a net long-term capital              
          loss of $194,118.  Included in the computation of that loss was a           
          claimed long-term capital loss of $289,316 (claimed 1992 worth-             
          less stock loss) that petitioners explained in a statement                  
          attached to their 1992 return as follows:  "The National Bank of            
          Harrah Common Stock was evaluated in June, 1992 and determined to           
          be worthless in accordance with Internal Revenue Code Section               




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