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The San Jose Property
Background
On July 17, 1989, petitioners purchased property located at
2976 Glen Crow Court, San Jose, California. From February to
July 1992, Van Van Nguyen (Nguyen), who was not related to
petitioners, resided at the property, but paid no rent.
Petitioner husband’s brother, Anthony Trans, at times during 1991
and 1992, maintained utility service at the San Jose property.
On December 7, 1992, the World Savings Bank foreclosed on the San
Jose property.
On Schedule E, Supplemental Income and Loss, of their 1992
joint Federal income tax return, petitioners reported a net loss
from the property totaling $112,283, consisting of a
“carryforward loss” in the amount of $91,941,9 depreciation of
$13,542, repairs of $4,500, auto and travel expenses of $2,100,
and utilities of $200. Petitioners deducted $16,097 of these
amounts in 1992 and carried forward the $96,186 balance to 1993.
On their 1993 return, petitioners claimed, in addition to the
$96,186 carryforward from 1992, depreciation of $1,693, with
9 On their 1989, 1990, and 1991 joint Federal income tax
returns as originally filed, petitioners did not list the San
Jose property as a rental property nor attribute any rental
income to it. In 1992, petitioners amended their 1990 and 1991
joint Federal income tax returns to report $2,400 in gross rental
income and newly claimed deductions that more than offset the
gross income for each year, thereby generating the carryover loss
to 1992.
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Last modified: May 25, 2011