- 11 -
Less adjusted basis: 484,080
Net long-term capital loss: (164,254)
The basis amount reported by the Johnstons on their second
amended 1990 return was their basis in all of their Burien Nissan
stock.
The Johnstons applied a portion of the 1990 long-term
capital loss against 1990 income and carried forward the
remainder, applying it against income earned in 1991, 1992, and
1993. The Johnstons absorbed the entire remaining capital loss
carryforward on their 1993 income tax return. They did not have
any capital loss to carry forward to 1994.
The Johnstons filed their 1994 Federal income tax return on
or about April 15, 1995. On Schedule D of their 1994 income tax
return, the Johnstons reported selling Burien Nissan stock as
follows:
Total sales price: $43,818
Less adjusted basis: 18246,881
Net long-term capital loss: (203,063)
The Johnstons had no basis in the shares of Burien Nissan
they sold in 1994. The Johnstons already had applied their
17(...continued)
We note that a $1 difference exists between the total
proceeds amount reported here and the amount reported in the
Johnstons’ original 1990 Federal income tax return.
18On their 1994 Federal income tax return, the Johnstons
computed their basis by subtracting the basis reported on their
original 1990 income tax return of $237,199 from their basis in
the 96,000 shares held on May 24, 1990 ($484,080). The Johnstons
disregarded the second amended 1990 return filed on Apr. 15,
1994.
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