-4-
Respondent no longer has copies of any of the six
partnerships’ Federal tax returns for 1990, and the
Schedules K-1, Partner’s Share of Income, Credits, Deductions,
etc., are not in the record. Respondent has a copy of Cinema’s
1990 Form 1120S, U.S. Income Tax Return for an S Corporation.
The original return reported gross income from wages,
interest, a State tax refund, miscellaneous income, and rental
income totaling $3,019,317. The original return also reported
long-term capital gain of $5,304 from the partnerships and
section 1231 gain of $76,070 from the S corporation. The record
does not indicate the gross income of the six partnerships.
On September 8, 1997, petitioners filed an amended 1990
Federal income tax return (the amended return) that was prepared
by their accountant.1 The amended return shows an additional tax
liability of $218,152, without statutory additions, which was
based upon $779,114 of gross income that was omitted from the
original return.2 The amount omitted from the original return
relates to cancellation of indebtedness income that petitioners
did not report.
1 Respondent asserted in the answer that the amended return
was filed pursuant to a plea agreement that settled a criminal
case brought against Mr. Hoffman. See United States v. Hoffman,
No. CR 96-1144(A)-JGD (C.D. Cal.) (the criminal case).
Respondent later conceded that the amended return was not filed
as a condition to the plea agreement.
2 Respondent never issued a notice of deficiency to
petitioners for 1990.
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