- 4 -
Petitioners’ Returns
Petitioners made a joint return of Federal income tax for
1994 by filing a Form 1040, U.S. Individual Income Tax Return
(the 1994 return). On line 21 of the 1994 return (“Other
income”), petitioners reported a negative amount, $354,495. In a
statement supporting that entry, petitioners, among other things,
(1) reported $1,338,924 as an item of income, labeled “FDIC-
SOUTHWEST SERVICE CENTER-Form 1099-C”, (2) subtracted an equal
amount, labeled “ERRONEOUS 1099-C – DEBT NOT DISCHARGED”, and
(3) subtracted $390,173 as a net operating loss (NOL) deduction.
That NOL deduction consisted of NOL carryovers from 1986, 1990,
and 1993.
Petitioners made a joint return of Federal income tax for
1996 by filing a Form 1040, U.S. Individual Income Tax Return
(the 1996 return). On line 21 of the 1996 return (“Other
income”), petitioners reported a negative amount, $118,961. In a
statement supporting that entry, petitioners, among other things,
subtracted $137,033 as an NOL deduction. That NOL deduction
consisted of NOL carryovers from 1990 and 1993.
Respondent’s Examination
Respondent undertook an examination of the 1994 return.
During the course of that examination, respondent summoned the
FDIC to produce all documentation relating to the loan. The
ensuing FDIC correspondence to respondent (the FDIC
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
Last modified: May 25, 2011