Stephen S. Wang, Jr. - Page 8

                                        - 8 -                                         

          taxable interest income.  He did not report his $154,000 insider            
          trading income, $150,000 of which was included in his gross                 
          income by respondent.  On his 1988 tax return, petitioner                   
          reported gross income of $17,026.85, his wages from Morgan                  
          Stanley, and he did not report the $50,000 insider trading income           
          included in his gross income by respondent.  For 1988, respondent           
          allowed petitioner a $125,000 deduction for the disgorgement of             
          his insider trading income, which resulted in no tax deficiency             
          for that year.  Respondent determined, however, that the                    
          disgorgement deduction was not in connection with a trade or                
          business and, accordingly, did not generate a 1988 NOL that could           
          be carried back to 1987.  Under respondent’s determination, most            
          (about $75,000) of the $125,000 disgorgement deduction remained             
          effectively nondeductible.                                                  
               On January 25, 1994, petitioner executed a Form 872, Consent           
          to Extend the Time to Assess Tax, intended to extend the 1987               
          assessment period to December 31, 1994.  The Form 872 was                   
          executed after April 15, 1991, after the normal 3-year period for           
          assessment under section 6501(a) had expired.  The Form 872 was             
          executed before April 15, 1994, within the 6-year period for                
          assessment under section 6501(e)(1) (that section applies where             
          substantial omissions from gross income exist).  The Form 872,              
          however, did not contain any explanation or indication of whether           
          the period for assessment was then open or under which particular           





Page:  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