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FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated herein by this reference. At the time the petition
herein was filed, petitioner resided in Orlando, Florida.
Petitioner timely filed his Federal income tax returns in
1992, 1995, and 1996. In 1995, petitioner reported on his
Federal income tax return that he received $49,218.81 as
nontaxable sick pay and $89,100 as nontaxable IRA distributions.
Respondent determined that $51,600 of the IRA distributions were
attributable to petitioner's disability. On Schedule C, Profit
and Loss From Business, of his 1995 tax return, petitioner
reported deductions of $70,428.52 from his automobile drag racing
activity named Emerson Racing Enterprises. Petitioner reported
no income from this activity, resulting in a $70,428.52 loss.
Related to this loss in 1995, petitioner carried back a $63,095
net operating loss deduction to taxable year 1992, which resulted
in a refund to petitioner of $11,579. At the end of 1995,
petitioner was age 57.
In 1996, petitioner reported nontaxable income of $50,628 as
sick pay, $29,500 in total IRA distributions, and $39,506 in
total pensions and annuities. Respondent determined that the
$39,506 in total pensions and annuities was attributable to
petitioner's disability. Petitioner reported zero income or loss
from the automobile drag racing activity in 1996. On his 1996
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