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Tax Reporting
LFI
On a Schedule F, Farm Income and Expenses, attached to
petitioners’ 1987 Federal income tax return Form 1040,
petitioners represented that Granot Loma was a Christmas tree
farm and claimed a depreciation deduction of $163,781 with
respect to personal property with a book value of $1 million and
improvements with a book value of $2,255,000.
On LFI’s Forms 1120S for 1988 through 1992, LFI reported the
following income, expenses, and net operating losses:
1988 1989 1990 1991 1992
Income:
Lodging -0- $16,290 $233,285$154,373 $124,148
Tree removal 8,135
Auction 305,567
Less: Refunds (1,414)
Other income 2,936 6,024 3,000
Total income -0- 25,947 544,876154,373 127,148
Expenses:
Salaries & wages $284,437144,996 89,15380,192 33,908
Repairs 14,225 30,771 12,758
Bad debts 9,958
Rents 2,000 2,856
Taxes 71,134 139,29758,494 80,155
Depreciation 307,422 379,204 363,126314,419 275,043
Employee benefits 11,084 21,732 6,839
Other expenses 375,147 301,289 403,580 239,342 176,417
Total expenses 967,006 921,932 997,156754,908 587,976
Net income or (loss)(967,006)(895,985) (452,280)(600,535)(460,828)
BAC
On BAC’s Forms 1120S for 1988 through 1992, BAC reported the
following income, expenses, and net operating losses:
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