Christopher K. and Brenda M. Cox, et al. - Page 9




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          March 1994 through December 1995.  The automobile’s annual lease            
          value was $7,750 in 1994 and 1995.6                                         
               Deborah also used the automobile for business purposes such            
          as collecting receivables, and other employees used the                     
          automobile during working hours to deliver small quantities of              
          produce.  Neither Cox Tomato nor any petitioner shareholder,                
          however, kept a mileage log or any other documentation to                   
          substantiate the automobile’s business use during the years at              
          issue.                                                                      
          IV. Notices of Deficiency                                                   
               In the notices of deficiency, respondent determined that in            
          1994 petitioner shareholders did not have sufficient bases in               
          Cox Tomato to claim the losses reported.  Respondent determined             
          that Christopher and Gregory had no bases in Cox Tomato.                    
          Respondent determined that Deborah had a basis of $2,791 in Cox             
          Tomato, allowed Deborah to recognize a flowthrough loss in 1994             
          to the extent of that basis, and disallowed the $12,000 loss she            
          claimed in 1995 because respondent determined that she had no               
          remaining basis.  Respondent disallowed each of petitioner                  
          shareholders’ NOL carrybacks for all the years in issue.                    
          Respondent further determined that Deborah must include the                 



               6Deborah has conceded that the distributions received during           
          1994 and 1995 are includable in her income as determined by                 
          respondent.                                                                 





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