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deficiency did not expire before the affected item deficiency
notice was issued. Id. at 557. We concluded that a Rule 155
computation was needed to consider whether a $2,000 credit
petitioners are entitled to for their inclusion of $2,000 of COD
income reported on their 1992 income tax return (the $2,000
credit) and other items reported on petitioner’s 1992 Schedule K-
1 received from Finley Kumble had properly been given effect in
computing the deficiency. Id. at 558-559, 564.
As part of respondent’s Rule 155 computation, Form 5278,
Statement-Income Tax Change, states petitioner’s “Adjustment to
Income” for partnership items of Finley Kumble as “Finley Other
Income” of $34,332. Respondent’s Form 4549-CG, Income Tax
Examination Changes, attached to the statutory notice of
deficiency, recited “Finley Other Income $36,332.” Respondent’s
computation has given proper effect to the $2,000 of COD income
reported on petitioners’ 1992 return.
The first page of Finley Kumble’s 1992 Form 1065, U.S.
Partnership Return of Income, at line 7, Other income (loss),
referenced “SEE STATEMENT 1”, which was a Form 8275, Disclosure
Statement, containing an Item 2 “CANCELLATION OF INDEBTEDNESS
$55,777,452”. Petitioner’s 1992 Schedule K-1 indicated he had a
0.0170-percent interest in Finley Kumble’s profits and losses,
and a 0.0345-percent interest in capital. The Schedule K-1 also
indicated that petitioner had a yearend negative capital account.
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