- 5 - Therefore, your taxable income for 1994 is increased by $17,238. Passive losses as corrected: Loss from Schedule E, Property A, Part I $1,670 Loss from Schedule E, Part II 16,445 Total corrected passive losses 18,115 Allowable passive income: Profit from Schedule E, Property C, Part I 877 Unallowable loss 17,238 On June 21, 1993, Dr. Schwalbach paid $16,050 for a 5/6 interest in 6,000 shares of stock in a corporation named Impression Delivery Corp. (Impression); the total purchase price was $19,266. Approximately 3 weeks later, the 6,000 shares were sold for $7,374, and 6 days after the sale, Dr. Schwalbach purchased an interest in another 4,100 shares of Impression. Petitioners did not recognize a loss in 1993 on the sale of the stock because the C.P.A. considered the purchase-sale-purchase as a "wash sale" under section 1091. In 1994, petitioners, upon the advice of the C.P.A., reported a short-term capital loss of $16,050 on their 1994 Schedule D, Capital Gains and Losses, with respect to Impression's stock. The C.P.A. rendered his advice after ascertaining that Impression had ceased operations and was facing litigation over allegedly fraudulent practices. Respondent disallowed the $16,050 loss reported by petitioners. According to the notice of deficiency, "It has not been established that the company known as Impression Delivery Corp. was insolvent or out of business in the year 1994. Further, it has not been established that you had an adjustedPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
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