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However, upon learning that Great Midwestern would charge them
$10,000 to transfer the obligation, the partners abandoned their
plan. Title to the Fresno property was never transferred to ASK
Properties and remains in the name of the partnership.
Petitioners repeatedly represented to respondent that the
Fresno property was owned and operated by ASK Properties. The
partnership filed its tax return for 1990 as a final tax return.
Petitioners filed corporate tax returns for ASK Properties on IRS
Forms 1120S, U.S. Income Tax Return for an S Corporation, from
1991 to 1994. Despite petitioners’ failure to transfer title to
the Fresno property, ASK Properties listed both the Fresno
property and the loan on a balance sheet attached to its first
Federal income tax return filed for 1991. Both were continuously
listed as property of ASK Properties through 1994. Petitioners
also requested and received an employer identification number
(EIN) for ASK Properties that differed from the EIN of the
partnership.
ASK Properties suffered losses of $43,319 and $36,083 and
reported depreciation deductions from the Fresno property of
$39,690 and $38,143 in 1993 and 1994, respectively. The amount
of principal outstanding on the loan was $375,825 in 1993 and
$362,762 in 1994.
Petitioners’ basis in stock of ASK Properties, without
consideration of the loan, was $8,064 at the end of 1992.
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