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Systems; by March 1989, they contributed an additional $97,000 to
the capital of CJP Systems; the assets of CJP Systems were
transferred to CJP Systems, Inc. upon its incorporation; and they
contributed $173,000 to the capital of CJP Systems, Inc. from
March 1989 through September 1990.
CJP Systems, Inc. used the same checking account as CJP
Systems from the time of its incorporation until June 1991.
Petitioners produced a copy of the checking account register
which begins with a deposit of $25,000 made on September 15,
1988, and ends on September 28 of an unspecified year. The
register reflects that nonsequentially numbered checks were
written on the account. The years in which the checks were
written, the checking account number, and the name of the bank
are not identified in the register. Petitioners did not provide
copies of cancelled checks or underlying documents supporting the
checks.
Petitioners did not file a corporate Federal income tax
return on behalf of CJP Systems, Inc. because, as petitioner
claimed, CJP Systems, Inc. did not have a profit. Petitioners
also did not report any income received from or deduct any
expenses of CJP Systems and CJP Systems, Inc. on their individual
returns.
Petitioners claimed a business loss deduction of $35,000 on
their jointly filed Form 1040, U.S. Individual Income Tax Return,
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