Lee G. Gale - Page 12




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          attributable to his equipment rental activity.  The depreciation            
          detail schedule listed nine pieces of equipment (one computer,              
          two trucks, three tractors, and three trailers) that generated              
          the $15,317 depreciation expense reported.  According to the 1992           
          individual return (and prior years’ returns), the computer was              
          placed in service on May 19, 1986; the trucks and tractors were             
          placed in service on June 1, 1986; and the trailers were placed             
          in service on July 9, 1986.  The equipment was depreciated under            
          the Accelerated Cost Recovery System, over a 5-year period, using           
          the straight-line method, with a half-year convention (except for           
          the computer), beginning on the date each asset was placed in               
          service.                                                                    
               1993 Individual and Fiduciary Income Tax Returns                       
               By reason of Mr. Binder’s illness, petitioner obtained an              
          extension of time to file his 1993 individual income tax return             
          (1993 individual return).  Petitioner did not file his 1993                 
          individual return until after the extended due date.                        
               Instead of filing Form 1040 for 1993, petitioner filed Form            
          1040EZ, Income Tax Return for Single Filers With No Dependents,             
          reporting no taxable income.  Mr. Binder had advised petitioner             
          to report all his business and investment activities on Form                
          1041, U.S. Fiduciary Income Tax Return (1993 fiduciary return),             
          under the name and taxpayer identification number of the living             
          trust.  As a result, the 1993 fiduciary return reported                     






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