- 9 -
notify the Internal Revenue Service that they were claiming that
Mr. Blonien was not a partner in Finley Kumble.
On February 24, 1988, several of Finley Kumble’s creditor
banks filed an involuntary petition under chapter 7 of the
Bankruptcy Code against Finley Kumble. On March 4, 1988, the
bankruptcy court granted relief to Finley Kumble under chapter 11
of the Bankruptcy Code. In 1992, a substantial amount of Finley
Kumble’s debts was discharged in the bankruptcy proceeding.
On Schedule E attached to their 1988 Federal income tax
return, petitioners reported a nonpassive partnership loss of
$106 from Finley Kumble and substantial partnership income from
the Whitman & Ransom law firm. Mr. Blonien believes that
petitioners reported this loss on the basis of a Schedule K-1,
Partner’s Share of Income, Credits, Deductions, Etc., he received
from Finley Kumble. Petitioners did not file Form 8082 with
respect to Finley Kumble with their 1988 return or otherwise
notify the Internal Revenue Service that they were claiming that
Mr. Blonien was not a partner in Finley Kumble.
On May 23, 1991, Mr. Blonien entered into a settlement
agreement with Francis Musselman, the chapter 11 trustee for
Finley Kumble. Under the settlement agreement, Mr. Blonien
agreed to pay $15,000 over a period of 10 years, together with
interest at the rate of 10 percent per year, to the Finley Kumble
bankruptcy estate. The settlement agreement referred to and
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