- 5 - receipts into the business checking accounts; often they used the receipts to make purchases (such as inventory). In 1993, petitioners began to experience financial difficulties resulting in the foreclosure of a rental property. In contemplation of bankruptcy, on September 15, 1993, petitioner arranged for Ms. Eagatatt to sign and file a Notice To Creditors of Bulk Sale pursuant to the Uniform Commercial Code (the bulk sale notice) in Orange County, California, in which the assets of Stanton Mexicatessen were purportedly transferred to Ms. Eagatatt. (Petitioners received no monetary consideration for this transfer, but the bulk sale notice indicated that Ms. Eagatatt was to assume all liabilities of the restaurant.) Further, the lease for the land on which the restaurant operated was amended to reflect the transfer to Ms. Eagatatt. On or about September 29, 1993, petitioners filed for bankruptcy protection from creditors. The record does not reflect the type of bankruptcy protection petitioners sought. Preparing and Filing of Tax Returns Petitioners' 1992, 1993, and 1994 joint income tax returns, all of which were untimely filed, were prepared by professional accounting firms. For 1992, petitioners reported on Schedule C, Profit or Loss From Business, a loss of $23,005 from the operation of Stanton Mexicatessen. Also for 1992, petitioners reported investment interest expenses of $12,221 on Schedule A, ItemizedPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011