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Sales Tax Deficiencies
Monterey was subject to an examination by the State of
Florida Department of Revenue (the Department) for sales tax
liabilities for 1987, 1988, and other years. The Department
found that Monterey had collected more sales taxes than reported
to the Department. For 1987 and 1988, Monterey reported to the
Department gross receipts of $288,276 and $124,763, respectively.
OPINION
I. Deficiencies in Tax
Respondent determined deficiencies in petitioners’ income
taxes for 1987 and 1988 principally on account of respondent’s
determination that petitioners underreported their Schedule C
income from Monterey by $75,859 and $44,347, for 1987 and 1988,
respectively.1 On the Forms 1040X, petitioners reported
increased Schedule C net income for Monterey of $80,214 and
$54,778, for 1987 and 1988, respectively, a capital gain of
$27,944 for 1988, net operating loss deductions of $74,749 and
$85,000 for 1987 and 1988, respectively, and decreases in
interest income of $747 and $288, for 1987 and 1988,
1 Respondent also determined increased self-employment
taxes under sec. 1401. Petitioners have not separately
challenged those determinations, which, we assume, are derivative
of respondent’s principal adjustments. We do not further discuss
the self-employment tax adjustments.
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Last modified: May 25, 2011