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determined by respondent in the notice of deficiency for 1985) by
$29,037. The amended return explained this reduction as follows:
To reinstate previously disallowed [Schedule
C] expenses as follows:
Disallowed on audit $36,145
Supplies (7,108)
Reinstated $29,037
Mr. Magness also executed, on petitioner’s behalf, an
amended income tax return (Form 1040X) for 1986, which was
submitted to respondent on January 12, 1996. Among other
matters, the amended return “reinstated” the previously
disallowed Schedule C expenses in the amount of $23,791 and the
previously disallowed Barrington Park limited partnership loss in
the amount of $26,710. In addition, the amended return reported
a basis by gift in the amount of $21,365 in the shares of United
Funds, Inc.
Also, on or about January 12, 1996, petitioner submitted to
respondent an unsigned and undated copy of a gift tax return,
Form 709, United States Gift (and Generation Skipping Transfer)
Tax Return, for 1985 for Maxine Hawksley, donor.9 The gift tax
return disclosed, inter alia, a gift of “mutual funds” to “Donald
B. Hawksley” of Gainesville, Missouri, in February 1985. The
gift tax return also disclosed that the donor’s adjusted basis in
9 Presumably, petitioner and Maxine Hawksley are related,
but the record does not disclose the nature of the relationship.
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