- 7 - speak with any consultants about how to operate a profitable stock car business. Petitioners’ Federal Income Tax Return On their 1992 joint Federal income tax return, petitioners reported a sale price of $159,100 for Tony’s CRC shares, basis in the shares of $109,100, and net capital gain of $50,000. With regard to Tony’s stock car activity, petitioners claimed on their Schedule C, Profit or Loss From Business (Sole Proprietorship), $5,571 in gross income and $71,692 in expenses, resulting in a net loss of $66,121.5 Petitioners also reported wage income of $51,931 from CRC. John P. Hayes, Esq. (Hayes), prepared petitioners’ 1992 Federal income tax return.6 Either Tony or one of his agents provided Hayes all the information that he used to prepare petitioners’ tax return. Respondent’s Examination and Determinations While auditing petitioners’ 1992 Federal income tax return, respondent’s agent contacted CRC’s accountants, Conley, McDonald & Sprague, and requested supporting documentation for the 5 In 1991, which was the first year that petitioners treated Tony’s stock car activity as a trade or business for Federal income tax purposes, petitioners reported gross income from this activity of $6,430 and losses of $57,135. 6 Although John P. Hayes, Esq., prepared petitioners’ 1992 Federal income tax return, he did not sign the return as the “preparer”.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011