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liability to be $25,000, which was fully paid through withholdings.
In August 1992, petitioner filed Form 2688 (Application for
Additional Extension of Time To File U.S. Individual Income Tax
Return) seeking an additional 2-month extension of the time to file
his 1991 tax return because he was still awaiting records necessary
to complete his return from Heidelberg & Woodliff. Petitioner
requested a new filing deadline of October 15, 1992, which was
approved by the Internal Revenue Service (IRS). Petitioner mailed
his 1991 tax return no later than October 15, 1992, and it was
received on October 19, 1992, by the IRS Service Center in Memphis,
Tennessee.
Notice of Deficiency
In the notice of deficiency, respondent disallowed
petitioner's $121,500 loss claim from Heidelberg & Woodliff because
he could not establish his basis in the partnership. Respondent
determined that petitioner received an $85,455 taxable distribution
from Heidelberg & Woodliff's salary reduction plan and accordingly
increased petitioner's taxable income by $40,355. Moreover,
respondent disallowed all but $211 of petitioner's $33,943
investment interest expense deductions on the basis that
petitioner's offsetting investment income was only $211.
Respondent also determined that petitioner had only substantiated
$29,443 of the interest expenses.
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