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Respondent determined the following deficiencies in Federal
income taxes and penalties:
Deficiency 6662(a) Penalty
Frank J. &
Ann M. Feraco
1993 $5,880 $1,176
1994 3,822 764
Thomas M. Feraco
1993 $2,226 $445
1994 2,058 412
This Court must decide: (1) Whether petitioners' pro rata
shares of income and loss from their S corporation must be taken
into account in computing their taxable income for 1993 and 1994;
specifically: Whether Frank J. and Ann M. Feraco's income should
be increased by $21,006 in 1993 and by $14,218 in 1994; whether
the income of Thomas M. Feraco (Thomas) should be reduced by
$10,695 in 1993 and $8,091 in 1994; and whether petitioners’
casualty loss in 1994 should be adjusted; (2) whether Thomas had
capital gain income of $15,714 and $15,040 from distributions in
excess of his basis in the S corporation during 1993 and 1994,
respectively; (3) whether Thomas had additional unreported income
of $1,700 in 1993; (4) whether Thomas is entitled to claim
Schedule C expenses of $3,546 for 1993; (5) whether Thomas is
liable for self-employment tax for 1993 and is entitled to the
corresponding deduction; (6) whether petitioners are entitled to
a reduction in their 1994 distributive income resulting from an
amended return filed by the S corporation; and (7) whether
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