12
Neither Northeast nor Sigma did business in 1988.
Petitioner worked in the paper and printing business before and
after these cases were settled.
4. Petitioners' Legal Fees and Federal Income Tax Returns
a. 1986
Petitioner paid legal fees of $10,243 relating to the
Northeast litigation and the adversary proceeding. Petitioners
deducted those fees on the Schedule C for petitioners' paper and
printing business filed with their 1986 Federal income tax
return. They reported no gross receipts and claimed a net loss
of $10,243 on Schedule C.
b. 1987
Petitioner paid legal fees in 1987 of $34,083 for the
Northeast litigation and $25,269 for the bankruptcy proceedings.
The bankruptcy legal fees included fees for: A conference held
by the attorneys with Mrs. Scofield, the attendance by attorneys
at a deposition of Mrs. Scofield, compilation of bankruptcy
pleadings and memos, research regarding discharge and pleadings
in bankruptcy, attorney-client privilege in bankruptcy, defenses
to objection to discharge, fraudulent conveyance/alter ego
exposure, and reviewing Judge Lavien's ruling on alter ego and
concealment of assets.
Petitioners deducted those fees ($59,352) on the Schedule C
for petitioner's paper and printing business filed with their
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