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The loss calculation for 1994 is calculated as follows:
Net farm revenues $1,132,681
add: depreciation 135,317
less: distribution (10/94) (147,174)
Interest income 13,057
Interest expense (12,082)
Total cash embezzled $1,121,799
50% Share $ 560,900
On both its original and amended Forms 1041 for the taxable
year 1995, the estate claimed that as a result of Melvin’s death
it acquired a 50-percent interest in BBP. In a document attached
to both the original and amended Forms 1041, the estate made the
following statement:
[The estate] acquired a 50% interest in Ballantyne
Brothers on March 4, 1994 as a result of the death of
Melvin Ballantyne. The interest in the partnership was
valued at $731,509 on the 706.
On March 4, 1994, the assets of Ballantyne Brothers
consisted of cash, marketable securities, notes
receivable, oil and gas properties, office furniture
and fixtures, farm inventory, seed, buildings and
equipment having a fair market value of $1,463,019.
Taxpayer has been unable to obtain the basis amounts
for these assets. Currently there is legal action
against the partnership to obtain such information.
On August 24, 1998, a settlement agreement was executed
which resolved the dispute concerning BBP. In negotiating the
settlement, representatives of the estate relied on the advice of
a certified public accountant as to the value of BBP’s assets.
The goal of the estate’s representatives was to obtain 50 percent
in value of the partnership’s assets. Under the settlement
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Last modified: May 25, 2011