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Share of Income, Credits, Deductions, etc., attached to the Form
1065 allocated 66.67 percent of the loss to petitioner ($972,899)
and 33.33 percent to Schlesinger and his bankruptcy estate.
7. Settlement of the Federal Suit
The counterclaim, the Federal court suit, and notices of lis
pendens initiated by GSD, petitioner, and Schlesinger were
settled with Sunbelt and the bankruptcy trustee for petitioner’s
chapter 7 bankruptcy estate in September 1992. GSD and the
bankruptcy trustee for petitioner’s bankruptcy estate agreed to:
(1) Release all claims against Sunbelt with prejudice, (2)
release all claims to Encino Park, (3) not disturb Sunbelt’s
title to Encino Park, and (4) release all claims to certain
condemnation proceeds. Sunbelt agreed to: (1) Pay $20,000 to
the bankruptcy trustee for petitioner, and (2) release all claims
against GSD and petitioner.
8. Petitioner’s Tax Returns for 1991, 1992, 1993, and 1994
Petitioner’s filing status for the years 1991 to 1994 was as
follows: Joint with Martha Johnston for 1991; single for 1992;
married filing separately for 1993; and joint with Paula Gulley
for 1994. Paula Gulley filed as married filing separately for
1993.
Petitioner’s GSD partnership interest was a community asset
of petitioner and Johnston. Thus, one-half of the 1991
partnership loss was allocable to each of them. Petitioner and
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