- 5 - account. Of these deposits, $3,500 were nontaxable transfers from bank accounts controlled by petitioners. Petitioners also deposited $141,130.52 into the Cohen account during 1996. Of these deposits, $74,857 represented nontaxable items. Petitioners had unexplained deposits into the two accounts in 1996 totaling $78,791.02. During 1996, petitioners maintained a brokerage account with Bear, Sterns & Co., Inc. (brokerage account). Petitioners recognized short- and long-term capital gains of $18,521 in 1996. Federal Tax Returns Grey acted as petitioners’ accountant and filed both business and personal returns for petitioners beginning in or around 1983. Petitioners filed a joint Federal income tax return for 1996 on July 18, 1997. They reported adjusted gross income of $10,075.42, no taxable income, and self-employment tax of $1,067.77. On their Schedule C, petitioners reported gross receipts of $20,680, other income of $80, and expenses of $13,202.96. Petitioners reported a net profit of $7,557.04 as business income on their return. Grey prepared petitioners’ personal return and the Form 1120 for NHIL. Grey reviewed the return with petitioners, who then signed the return. On July 8, 1998, petitioners filed a Form 1040X, Amended U.S. Individual Income Tax Return, for 1996. The only change reported on this return was a claim by petitioners for the earnedPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
Last modified: May 25, 2011