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of the Sipsey Harbor lots. Under the real estate mortgage,
petitioner was indebted to First State Bank of DeKalb County for
$150,000.
During 1989, petitioner received $30,000 from the sale of
the two Sipsey Harbor lots. Petitioner’s basis in the two Sipsey
Harbor lots sold in 1989 was $6,394. During 1990, petitioner
received $70,000 from the sale of the four Sipsey Harbor lots.
Petitioner’s basis in the four Sipsey Harbor lots sold in 1990
was $15,985. No information concerning Sipsey Harbor or any
Sipsey Harbor lot is included on petitioner’s 1987, 1988, 1989,
or 1990 tax return.
Farming and Harness-Racing Activities
For each of the years at issue, petitioner claimed
substantial losses relating to a farm whose principal product was
grain. Petitioner and his family performed most of the labor at
his farm. Petitioner himself did the planting and plowing.
Each Schedule F, Profit or Loss From Farming, bearing
petitioner’s name and reflecting the periods from 1981 through
1990 claimed a net loss. The aggregate claimed net losses
totaled $984,221. For 1982, 1983, 1984, 1985, 1986, and 1987,
the claimed net losses from farming exceeded the net profit
reported from petitioner’s law practice.
In 1990, petitioner also claimed losses relating to harness
racing. Petitioner claimed breeding fees, dues, stakes,
harnesses, and entry fees as expenses.
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