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FINDINGS OF FACT
Many facts were stipulated. We incorporate herein by this
reference the parties’ stipulations of fact and the exhibits
submitted therewith. We find the stipulated facts accordingly.
Petitioner resided in Ketchum, Idaho, when his petition was
filed.
Petitioner is a licensed real estate and mortgage broker who
conducts a money-lending operation (operation) through his sole
proprietorship (sole-proprietorship) and his wholly owned
corporation (corporation). In the operation, third party
investors (investors) lend money to the sole-proprietorship, the
sole-proprietorship lends money to the corporation, and the
corporation lends money to real estate developers and other
contractors (collectively, developers).
Petitioner filed a 1994 Form 1040, U.S. Individual Income
Tax Return. Petitioner reported on Schedule C, Profit or Loss
From Business, of that return that the sole-proprietorship had
gross receipts of $16,807, total expenses of $102,989, and a net
loss of $86,182. Petitioner claimed as one of the expenses
“Other Interest” of $77,872 for interest paid to the investors.
Petitioner claimed as the other expenses “bad debts”, “car and
truck expenses”, “depreciation”, “legal and professional
services”, “travel”, “meals and entertainment”, and “other
expenses”.
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Last modified: May 25, 2011