- 9 - Petitioners’ Federal income tax returns for 1996 and 1997 were filed on October 20, 1997, and January 6, 2000, respectively. Mr. Assaad could not offer any explanation as to why the 1997 return was filed untimely. Respondent audited petitioners’ 1996 return.11 On July 16 or 17, 1998, respondent mailed to petitioners an audit appointment letter with respect to their 1996 taxable year. The record does not reflect when respondent commenced an examination regarding petitioners’ 1997 taxable year. In computing the NOL carryforward from 1992, respondent determined that petitioners should have reported foreclosure income of $2,052,385 with respect to 15 Isabella in addition to the $448,608 gross profit that they reported on their 1992 return. He made no adjustments to the $2,226,664 cost of goods sold that petitioners reported. Respondent revised petitioners’ income from the real estate development business to $2,500,993. He disallowed $369,023 of the expenses that petitioners claimed on their 1992 Schedule C, but he allowed $915,002 of additional expenses not originally shown on petitioners’ 1992 return. 11Respondent previously audited petitioners’ 1992, 1993, 1994, and 1995 tax returns. Respondent disallowed the NOL carryforward deductions for 1993, 1994, and 1995. However, petitioners petitioned the Tax Court. Respondent represents that he “settled the Tax Court case for no deficiency on the basis that some net operating loss existed and to the extent it existed, it was sufficient to eliminate all of the petitioners’ income and income tax liability for those years.”Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011