- 7 - a substantial sum5 had been expended in connection with these renovations. On March 2, 1995, CWS distributed the Mystic Lake property to the petitioner and Ms. Gutierrez (the distribution). Soon thereafter, petitioner and Ms. Gutierrez obtained a $300,000 construction loan from Barnett Bank to fund the construction of the castle residence that they intended to build on the property. As of the close of 1995, the castle residence was substantially completed. Petitioner and Ms. Gutierrez filed a timely joint Federal income tax return for each year in issue. Each return was prepared by John D. Gaskins,6 a certified public accountant whose license was later revoked because he was convicted of Federal income tax evasion. Income of $64,400 is reported on petitioner’s 1994 return, which income consists of $34,635 of shareholder pro rata income from CWS, $29,546 of wages; and $219 of interest. Income of $33,461 is reported on petitioner’s 1995 return, which income consists of $18,259 of shareholder pro rata 5 The parties stipulated that the basis of the Mystic Lake property had increased by $63,949 as of March 1995. As best as can be determined from the record, the addition to the property’s basis is attributable to the improvements made to the four existing structures. Some of the expenditures now included in the property’s basis apparently gave rise to deductions claimed by CWS and disallowed by respondent. 6 Mr. Gaskins was also involved as a principal with petitioner in various welding businesses.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