Matti Kosonen - Page 5




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               Petitioner reported losses of $56,954 on line 42 of the                  
          Schedule E that he attached to his 1994 income tax return, and on             
          line 17 (rental real estate income or loss) on his 1994 Federal               
          income tax return.  He subtracted $56,954 from his other income               
          to calculate his adjusted gross income for 1994.                              
               Petitioner attached three first pages and one second page of             
          Schedule E to his 1994 income tax return.  He reported the income             
          and expenses for six of his rental properties on two of the first             
          pages (three on each) and income and expenses for the seventh                 
          rental property and totals for the seven rental properties on the             
          third first page.  Petitioner reported the following on lines 22              
          and 23 of his 1994 Schedule E:                                                
                                         Line 22,   Line 23,                            
                                         Income    Deductible                           
                    Property             or loss      loss                              
                    19 Cold Springs    ($6,626)    ($6,626)                             
                    9 Cold Springs     (20,971)    (20,971)                             
                    241-21 Hamilton      (2,531)   (2,531)                              
                    15 Cold Spring     (12,590)    (12,590)                             
                    106 1st St.          (5,720)   (5,720)                              
                    63 Belltown          (8,516)   (8,516)                              
                    80 Lawn              1,939     (1,939)                              
               The explanation for line 24 of the 1994 Schedule E instructs             
          taxpayers to add positive amounts shown on line 22 but not to                 
          include any losses.  Petitioner reported $1,939 on line 24.                   
               The explanation for line 25 of the 1994 Schedule E instructs             
          taxpayers to enter the total amount of royalty losses from line               
          22 and rental real estate losses from line 23.  Petitioner                    
          reported a $58,893 loss on line 25.                                           





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