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In May 1994, petitioner filed a complaint for legal
malpractice, breach of fiduciary duty, and breach of contract
against Lurie & Zepeda. Lurie & Zepeda filed a cross-complaint
to recover unpaid fees and costs. In May 1995, a default
judgment of $796,352.65 plus interest was entered in favor of
Lurie & Zepeda. After petitioner filed a notice of appeal, the
parties reached a settlement (Lurie & Zepeda settlement) in July
1995, whereby petitioner was permitted to satisfy his obligation
under the judgment by paying Lurie & Zepeda $500,000. The
settlement sum was to be paid by immediate withdrawal of funds
from the United Ready Mixed trust account and by petitioner’s
payment of the balance plus interest before July 9, 1996.
Petitioner fully performed his obligations under the Lurie &
Zepeda settlement in 1996.
Petitioner’s Reporting Positions for Years at Issue
1992 Individual Income Tax Return
By reason of illness of his return preparer, Sidney Binder
(Mr. Binder), petitioner obtained an extension of time to file
his 1992 Form 1040, U.S. Individual Income Tax Return (1992
individual return), until August 16, 1993. Petitioner did not
file his 1992 return until after the extended due date.
Petitioner reported both his personal activities and those
of the living trust on his 1992 individual return. Petitioner
included a Schedule C, Profit or Loss from Business (Sole
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