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B&L issued a Form 1099-B to Mr. Enyart for 1992 that showed
$50,000 of income relating to the sale to B&L of his B&L stock.
B&L also issued a Form 1099-Misc to Mr. Enyart for 1992 that
showed $300,000 of income, i.e., the value of the B&L equipment
that it transferred to Mr. Enyart as consideration for Mr.
Enyart’s covenant.
Petitioners filed a joint U.S. Individual Income Tax Return,
Form 1040, for 1992 (joint return), which was signed by Terry R.
Fyffe (Mr. Fyffe) as paid return preparer. Petitioners reported
the $50,000 that Mr. Enyart received for the sale of his B&L
stock in Schedule D, Capital Gains and Losses (Schedule D), of
their joint return. Petitioners did not report as ordinary
income in their joint return the $300,000 worth of B&L equipment
that B&L transferred to Mr. Enyart during 1992 for Mr. Enyart’s
covenant. Instead, petitioners attached Form 6252, Installment
Sale Income (Form 6252), to that return. Petitioners reported in
Form 6252 the $300,000 value of the B&L equipment as the selling
price of certain unidentified property which they claimed was
sold on the installment method. Petitioners indicated in Form
6252 that the unidentified property which they claimed was sold
on the installment method was acquired on January 1, 1983, and
sold on August 31, 1992. Petitioners claimed no basis in Form
6252 for that property. Petitioners claimed in Form 6252 that
they received $20,000 during 1992 with respect to the sale of the
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