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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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Last modified: May 25, 2011