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income and expenses from the apple orchard activity on Schedule F
(Profit or Loss From Farming) and attached the schedule to Form
1065. In 1992 and 1993, petitioners reported the income from the
dental practice on Schedule C (Profit or Loss From Business),
which was attached to petitioners' Form 1040.3 In 1992,
petitioners transferred the dental practice income from Schedule
C to the Form 1065 filed by Twin Creeks Organic Farm, reporting
the dental practice income as if it were partnership gross
receipts, and then netted that amount with the apple orchard
losses. In 1993, petitioners transferred the dental practice
income from Schedule C to Schedule F, as farm income, and
attached Schedule F to Form 1065. In 1993 and 1994, petitioners
netted the income from the dentistry activity with the apple
orchard activity income on Schedule F and reported that net
amount as partnership income on Form 1065.
Petitioners reported dentistry activity gross receipts and
apple orchard activity income and expenses as follows:
Item 1992 1993 1994
Gross receipts:
Dentistry $57,920 $68,400 $67,600
Apple orchard -0-1 1,7002 8502
Expenses incurred:
Farm expenses3 ($23,008) ($56,052)4 ($57,887)4
Other expenses (19,462)5
3 The record does not show whether petitioners filed a
Schedule C (Profit or Loss From Business) with their Form 1040
(U.S. Individual Income Tax Return) for 1994.
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