Bill L. and Patricia M. Spencer - Page 19

                                       - 19 -                                         

          made for the 3-month period from November 1991 through January              
          1992.  The S/S/S note was revised during July 1992 when the term            
          for repayment was extended from 10 years to 15 years, and the               
          interest rate was reduced from 10 percent to 8 percent.                     
          Following the July 1992 revision, no payments were made during              
          the period from September through December 1992.  During January            
          1993, the S/S/S note was again revised, and the interest rate was           
          reduced from 8 percent to 6.5 percent.                                      
          Information Reported by SPC-FL and the SPC-FL Shareholders                  
               SPC-FL deducted the interest it paid to SSI.  The interest             
          expense deduction ultimately passed through to the individual               
          SPC-FL shareholders.17   SPC-FL did not issue Forms 1099 to                 
          report interest paid to the SPC-FL shareholders.  On their                  
          respective Federal income tax returns, the SPC-FL shareholders              
          did not report any interest income from SPC-FL and did not claim            
          any interest deductions for amounts paid to SSI for taxable years           
          1990, 1991, or 1992.  On their Federal income tax returns, the              
          Spencers claimed the following losses as Mrs. Spencer's share of            
          losses from SPC-FL:                                                         
                         Year           Amount of Loss Claimed                        
                         1990                $50,812                                  
                         1991                33,255                                   
                         1992                55,800                                   

          17   Mr. Spencer signed all of SPC-FL's Federal income tax                  
          returns for the years in issue in the instant case.                         

Page:  Previous  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  28  Next

Last modified: May 25, 2011