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the parts of the schedule reserved for identifying the
transactions, he wrote, “Kidder Peabody & Co. Acct -- Litigation
-- Partial Payment -- Received Escrowed -- Interest Bearing
Acct”.
Petitioner’s 1991 return contained a Schedule C for
reporting profits or losses from business. On that form,
petitioner identified his principal business as real estate
appraisal and financing. He reported income of $790 (in the form
of interest) and expenses of $28,522. The expenses included
“other expenses” of $10,000 for “Telephone, Litigation-
Reputation, Professional Dues, Library-Law Publications”.
Petitioner also claimed a net operating loss carryover deduction
of $11,439.
The State Income Tax Refund
Records of New York State Department of Taxation and Finance
indicate that, in 1990, petitioner paid $1,743.89 in State and
local income taxes. In 1991, the State issued a refund to
petitioner of $743.89 and credited the $1,000 balance of these
taxes to petitioner’s 1991 State and local income tax
liabilities. These transactions were not reflected on
petitioner’s 1991 Federal income tax return.
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