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Jerry & Coleen Bitker 12/31/96 12/31/97
Capital gain or loss $473,015 $89,312
Exemptions 5,100 1,060
Itemized deductions 6,770 2,535
K-1 Ray Bitker & Sons (C) 40,302 22,031
K-1 Ray Bitker & Sons (J) 60,453 33,047
Schedule E rental (101,597) (25,000)
Schedule F Coleen (1,032) –
Schedule F Jerry 36,545 33,770
SE AGI adjustment (2,542) (4,511)
Self-employ health (2,241) (1,953)
Standard deduction (6,700) –
Total adjustments 508,073 150,291
The explanations attached to the notices of deficiency state
that the income from the Bitker partnership should be increased
and “We have adjusted your return in accordance with the
partnership return, which has also been examined.”3 The
adjustments to Schedules F were explained as “Expenses were
deducted on Schedule F that were attributable to the rental
activity. These expenses are allowed on Schedule E.” The
adjustments to the Schedule E rental expenses were determined to be
“Rental expenses, which you deducted elsewhere, are allowed as
rental expenses. Losses are limited due to passive loss rules.”
The explanations attached to the notices of deficiency state
that adjustments were made with respect to capital gain or loss
because “Amounts distributed by partnership, which are in excess of
3 The examination report showing adjustments resulting from
the examination of the Bitker partnership returns was not attached
to the notices of deficiency. The notices of deficiency do not
otherwise show or explain the adjustments made to the partnership
returns.
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