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No gain from the sale of the ranch or income from the partnership
was reported on the amended return.
Also in October 1989, petitioners filed their 1988 Federal
income tax return. This return was prepared by Mr. Henss.
Petitioners did not report any gain from the sale of the ranch or
any partnership income on this return and did not make any
disclosure with respect to either the sale of the ranch or the
Schedule K-1 issued to petitioner. Instead, on Schedule D of
their return, petitioners reported a sale of petitioner's
partnership interest on August 1, 1988, to the P.C. at a purchase
price equal to petitioner’s alleged adjusted basis. No gain or
loss was realized on the purported sale. Petitioners reported
taxable income of $7,013, total tax of $1,054, and an overpayment
of $78,946.
In 1992 or 1993, respondent audited the partnership's tax
return for 1988.6 During the audit of the 1988 partnership
5(...continued)
his interest in the partnership and/or the ranch was included in
the transfer, petitioner admitted that neither petitioner's
partnership interest nor any ownership interest in the ranch was
included on the original list of assets allegedly transferred to
the P.C. No documentation regarding the alleged transfer to the
P.C. was introduced into evidence at the trial. Petitioner
testified that the failure to list his partnership interest or
any interest in the ranch was a scrivener's error and that the
omission was later corrected. The record is silent as to when
this alleged amendment occurred.
6Respondent also audited the partnership’s 1982 tax return
(continued...)
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