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part of that schedule, they reported “Rents received” of $36,505
and claimed “Total expenses” of $68,174 and a “Deductible rental
real estate loss” of $3,167 with respect to the Sanchez Street
property. In Part I of the 1992 Schedule E, petitioner and Ms.
Brodsky claimed “Total rental real estate and royalty income or
(loss)” of ($3,167) with respect to the Sanchez Street property.
On May 14, 1995, respondent received the 1993 joint return.
On page 1 of the 1993 joint return, petitioner and Ms. Brodsky
reported, inter alia, the following:
Line on Page 1 of
Item of Income or (Loss) the 1993 Return Amount
Wages, salaries, tips, etc. 7 $69,506
Taxable interest income 8a 250
Dividend income 9 1,087
Business income or (loss) 12 (9,360)
Capital gain or (loss) 13 (3,000)
Total IRA distributions 16a 18
Rental real estate, royalties, 18 15,080
partnerships, S corporations,
trusts, etc.
1Petitioner and Ms. Brodsky reported that the entire amount of the IRA
distributions was taxable.
In the 1993 joint return, petitioner and Ms. Brodsky reported
“adjusted gross income” of $73,118, “Itemized deductions” of
$60,029, and “Taxable income” of $3,689.
The 1993 joint return included two Schedules C, one of which
showed that petitioner operated a business as an “AUDIO/VIDEO
COMPONENTS WHOLESALER” (wholesale business) and the other of
which showed that petitioner operated a business described as
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