- 4 -                                         
             petitioner reported the following wages, tips, and other                 
             compensation from his employment with State Farm during the              
             years in issue:                                                          
                               Year            Compensation                           
                               1987            $188,435.47                            
                               1988            190,949.62                             
                               1989            211,946.06                             
                               1990            188,581.07                             
                               1991            186,605.22                             
             Real Property and Related Activities                                     
                  Sometime during the late 1970's, petitioners purchased              
             approximately 5 acres of real estate located in Calhoun                  
             County, Michigan (the 5-acre parcel).  Shortly after                     
             purchasing the property, petitioners constructed a house                 
             on the property which they used as their personal residence              
             during each of the years in issue.                                       
                  Circa 1981, petitioners purchased approximately 40                  
             acres of real estate (the 40-acre parcel) contiguous to                  
             the 5-acre parcel.  Prior to petitioners' purchase of this               
             40-acre parcel, the previous owner had raised cattle on the              
             land.  According to the depreciation schedules attached to               
             their returns, petitioners claimed an aggregate basis of                 
             $45,000 in the 40- and 5-acre parcels.                                   
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