Mun Li Fong - Page 8

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          of the Code and that thereunder petitioner's Federal income tax             
          liability for 1986 was open for 1 year from June 29, 1995 (the              
          day the Court’s March 30, 1995, decision became final),3 in order           
          for respondent to mail to petitioner a timely notice of                     
          deficiency for 1986.                                                        
               The underlying basis for the $375,173 income tax deficiency            
          reflected in respondent’s notice of deficiency to petitioner for            
          1986 is based on respondent’s recomputation of the taxable gain             
          petitioner realized on receipt of the properties received in                
          liquidation of LY Enterprises.  Based on the alleged underlying             
          grounds for settlement of the depreciation adjustment that was              
          involved in the 1989 Fong case (that petitioner had total tax               
          bases in the properties of approximately $2 million), respondent            
          determined that on December 31, 1986, when the properties were              
          received by petitioner, the properties had a fair market value of           
          $2,033,000 and that such value, reduced by petitioner’s $75,000             
          tax basis in the stock of LY Enterprises, produced a taxable gain           
          of $1,958,000 to petitioner for 1986.                                       
               With regard to the substantive merits of respondent’s                  
          underlying tax adjustment for 1986, petitioner alleges that on              
          liquidation of LY Enterprises and on receipt of the properties in           
          1986, corporate liabilities of LY Enterprises were assumed by               

          3    Under sec. 7481(a) and Rule 190, where no appeal is filed, a           
          Tax Court decision becomes final 90 days after the decision is              
          entered.                                                                    




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