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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
petitioners.
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