Allan & Judy N. Green - Page 2

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          references are to the applicable versions of the Internal Revenue           
          Code.  Rule references are to the Tax Court Rules of Practice and           
          Procedure.  Dollar amounts are rounded to the nearest dollar.               
                                  FINDINGS OF FACT                                    
               Some facts were stipulated.  The stipulated facts and the              
          accompanying exhibits are incorporated herein by this reference.            
          We find the stipulated facts accordingly.  Petitioners are                  
          husband and wife, and they resided in Long Beach, California,               
          when their petition was filed.                                              
               In May 1980, petitioners and a third individual formed an S            
          corporation named Gilliflower’s Shoppe, Ltd. (GF I).  During                
          August 1981, GF I opened a 1,500-square-foot retail store in                
          Sunnyside, New York.  In October 1981, the carpeting, inventory,            
          and leasehold improvements in that store were damaged by fire.              
          On February 14, 1982, a second fire destroyed a wall in the store           
          and the rest of the store’s inventory.  Petitioners received no             
          reimbursement as to the fires, and the store operated at a loss             
          in 1981 and 1982.  The building in which the store was located              
          later burned to the ground in April 1983.  Petitioners received             
          no reimbursement as to this fire, and the store closed                      
          permanently.  The record does not establish the income or loss of           
          GF I for any of its taxable years.  Nor does the record establish           
          the amount of the income or loss of GF I that passed through to             

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