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1988 (1988 White Star compensation).
In Schedule B (Interest and Dividend Income) of petitioners'
returns for the years at issue, petitioners reported interest
income from, inter alia, the Indian Head business savings ac-
count.
In Schedule E (Supplemental Income Schedule) of petitioners'
returns (Schedule E) for the years at issue, petitioners reported
the following amounts of rental income with respect to the
properties indicated:
Year Seabrook Property North Berwick Property
1986 $21,600 *
1987 30,000 -0-
1988 6,000 $28,000
* Although petitioners received $2,925 of rental
income from Kitchen Tech for the North Berwick
property, that property was not listed as rental
property in petitioners' 1986 return.
During 1989, White Star filed its 1988 Form 1120S in which
it reported gross receipts of $506,336 and ordinary income of
$773. In Schedule E of their 1988 return, petitioners reported
$773 of income with respect to White Star.
In April 1989, petitioners filed Form 1045 (Application for
Tentative Refund) in which they claimed refunds based on an
alleged net operating loss of $52,136 that they carried back from
1988 to 1985, 1986, and 1987. A large portion of that loss was
attributable to an alleged casualty loss of $52,002 that peti-
tioners claimed with respect to a fire at the Seabrook property
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