- 7 - income of $127, (3) Finley Kumble ordinary loss of $1,251, and (4) itemized deductions of $57. Discussion Petitioners and respondent provide the following alternative computations of petitioners’ additional taxable income: Petitioners’ Computation Respondent’s Computation Additional Taxable Income Additional Taxable Income COD income $9,482.17 $36,332 $2,000 credit (2,000.00) (2,000) Finley Kumble interest income 127.00 Already accounted for Capital loss (18.00) Already accounted for Finley Kumble ordinary loss (1,251.00) Already accounted for Itemized deductions (57.00) Already accounted for Total: 6,283.17 34,332 Petitioners argue the two-step process described above was not the proper method to compute and allocate COD income to petitioner. They complain that the two-step process resulted in an allocation of COD income to petitioner that substantially exceeds his percentage interest in profits and losses as shown by his Schedule K-1 for 1992, the taxable year in issue. Petitioners also argue respondent’s Rule 155 computation did not take the adjustment items into account. Issue 1. Whether the Proper Method Was Used To Compute and Allocate Finley Kumble COD Income to Petitioner Petitioners argue that, in accordance with Finley Kumble’s 1992 Form 1065 and Schedule K-1, petitioner’s increased distributive share of Finley Kumble’s COD income should bePage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011