Gary L. Pierce - Page 12

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               Petitioners claimed a net operating loss for 1989, which was           
          carried back to 1986, resulting in an excess general business               
          credits carryback for 1986 of $19,000, of which $3,513 was                  
          carried back to 1984.  Respondent has disallowed the $3,513 in              
          excess business credits carried back to 1984.  The $3,513                   
          deficiency determined by respondent for the year 1984 is a direct           
          result of the 1989 writedown.  Respondent’s disallowance of Mary            
          Catherine’s writedowns for 1989 and 1990 resulted in the                    
          adjustments to petitioners' net operating loss carrybacks from              
          1989 to 1986 and 1987 in the amounts of $222,859 and $1,311,418,            
          respectively, from 1990 to 1987 and 1988 in the amounts of                  
          $151,729 and $907,516, respectively, and from 1991 to 1988 in the           
          amount of $1,038,814.                                                       
          Suit Against Bobrow                                                         
               On December 22, 1993, Mary Catherine and petitioners filed a           
          complaint in the Connecticut Superior Court for the District of             
          Hartford against Alec R. Bobrow, David S. Bobrow, Alan J. Nathan,           
          and Ronald Mamrosh, the Bobrow accountants who prepared                     
          petitioners’ and Mary Catherine’s 1989 and 1990 Federal income              
          tax returns, for breach of contract and negligence in the                   
          preparation of the returns.                                                 
               The complaint alleges that respondent “has assessed against            
          the plaintiff Mary Catherine Development Co. additional moneys              
          due in the form of additional taxes, interest and penalties.”               





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