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on the CIS, under the category “Other information relating to
your financial condition”, that there were no court proceedings
or repossessions.
Petitioner’s Claimed Net Operating Loss Deduction
For taxable year 1993, petitioners claimed a net operating
loss deduction of $3,992,234, comprising net operating loss
carryovers from prior years in the following amounts:
Year Amount
1986 $134,414
1987 424,283
1988 306,907
1989 1,627,007
1990 1,417,445
1991 82,178
3,992,234
Respondent’s Determinations
Respondent determined that for taxable year 1993 petitioners
had unreported ordinary income of $2,781,810 from discharge of
the debts owed by petitioner to Bonnevista and Castle Towers.8
Respondent also disallowed petitioners’ claimed net operating
loss deduction.
8 The notice of deficiency charges petitioner with
unreported cancellation of indebtedness income based on the
$2,148,481 loan due from petitioner to Bonnevista at the
beginning of 1991, rather than the $2,244,164 due at the end of
1991. On brief, respondent states that although the facts
support using the larger, more recent, loan balance to compute
petitioner’s 1993 cancellation of indebtedness income, respondent
has not amended his position to assert an increased deficiency.
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Last modified: May 25, 2011