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and 12 monthly payments of $5,117 on its 1996 Federal income tax
return.
Income Tax Reporting of the Burien Nissan Sale
The Johnstons filed their original 1990 Federal income tax
return on or about April 2, 1991.15 On Schedule D of their
original 1990 income tax return, the Johnstons reported selling
Burien Nissan stock on May 25, 1990, as follows:
Sales price: $121,327
Cost/basis: 237,199
Net long-term capital loss: (115,872)
On April 15, 1994, the Johnstons filed a second Form 1040X
(second amended 1990 return) to reflect changes in the treatment
of the Burien Nissan sale.16 On the second amended 1990 return,
the Johnstons reported selling Burien Nissan stock
as follows:
Total sales price: 17$319,826
15Norm Smith prepared all income tax returns for Burien
Nissan, the Johnstons, the Johnston Family Partnership, and Don
Johnston, Inc., for all years from 1988 through 1998.
16The Johnstons filed their first Form 1040X amending their
1990 income tax return to reflect changes in the treatment of
interest expense on Apr. 15, 1994.
17The Johnstons computed their sales proceeds as follows:
Proceeds reported on original return $121,327
Amount due the Johnston Family
Partnership which had been paid to
Mr. Johnston 145,000
Payments received in 1990 and 1991 53,500
Total 319,827
(continued...)
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