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Terrors entered many tournaments during the years in issue. The
fishing tournaments were funded by moneys advanced to Billfish by
petitioner. Billfish made interest-free loans to Texas Terrors,
which were the sole source of funds for Texas Terrors.
Petitioner did not charge Billfish interest on the loans. If
Texas Terrors won prizes in fishing tournaments, the money was
given to the team members. The prize money was not reported as
taxable income to Texas Terrors. Texas Terrors reported the
following gross income, expenses, and income or loss on its
Federal income tax returns for the years indicated:
Year Gross Income Expenses Income(Loss)
1984 $25,568 $154,296 ($127,728)
1985 53,565 221,061 (167,496)
1986 49,195 81,710 (32,515)
1987 - 40,681 (40,681)
1988 - 59,432 (59,432)
Billfish did not file timely Federal income tax returns for
1989 or 1990, and Texas Terrors did not file a timely return for
1989. Billfish did not maintain records sufficient to
substantiate the travel expenses, meals and entertainment
expenses, and other expenses of operating Renegade during the
years in issue.
Losses incurred by Billfish and by Texas Terrors were
deducted against other income of petitioners on their Federal
income tax returns for the years in issue.
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