June Cordes, et al. - Page 49




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                               ($27,130).                                             
                    4.   Petitioner claimed a net operating loss for 1994             
                         and carried a loss back to 1992.  Petitioner                 
                         concedes it was not entitled to claim a net                  
                         operating loss in 1994 or carry a loss back to               
                         1992.                                                        
                    5.   Respondent recomputed petitioner’s environmental             
                         tax and environmental tax deduction.  Petitioner             
                         presented no argument regarding this                         
                         recomputation, and we deem petitioner to have                
                         conceded this adjustment.                                    
                    6.   Respondent determined petitioner was liable for a            
                         civil fraud penalty for 1992 in the amount of                
                         $20,832 pursuant to sec. 6663.  Respondent                   
                         concedes that determination.                                 
                    7.   Respondent determined petitioner was liable for a            
                         penalty for 1992 pursuant to sec. 6662(a) for                
                         substantial understatement of tax.  Petitioner               
                         presented no argument regarding the penalty.  We             
                         deem petitioner to have conceded the application             
                         of the penalty.                                              
               B.   1993:                                                             
                    1.   Respondent adjusted petitioner’s income for 1993             
                         to reflect additional gross receipts of                      
                         $1,199,590.                                                  
                         a.    Petitioner concedes this adjustment, to the            
                               extent of $326,852.                                    
                         b.    Respondent concedes this adjustment, to the            
                               extent of $30,000.                                     
                         c.    The remaining $842,738 at issue reflects               
                               gross receipts that respondent determined              
                               were income to petitioner for 1993 because             
                               respondent determined petitioner used an               
                               incorrect method of accounting for its 1993            
                               taxable year and readjusted petitioner’s               
                               income to reflect income accrued under the             
                               accrual method of accounting.  The parties             
                               stipulated that the final decision in                  
                               Cordes Fin. Corp. v. Commissioner, supra,              
                               would decide the proper amount of                      
                               petitioner’s gross receipts for 1993.  In              
                               accordance with the parties’ stipulations,             
                               petitioner’s income will be increased by               
                               $405,181 from gross receipts due to a                  
                               change in accounting method.                           
                    2.   Respondent readjusted petitioner’s reported bad              
                         debt deduction for 1993 by $650,900 to reflect               






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