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The parties stipulated that respondent’s adjustments
resulted in passive activity losses in the amount of $614,164 and
capital losses of $48,244 being fully absorbed in 1994, and
therefore, those amounts that were carried forward to
petitioners’ 1995 tax return were adjusted and 1995 taxable
income and penalty were increased by $674,789 and $48,244,
respectively.
The parties also stipulated that the period of limitations
for the assessment of a deficiency has expired for the 1993
taxable year pursuant to section 6501.
Background
This case was submitted fully stipulated, and the facts are
so found. The stipulations of the parties, with accompanying
exhibits, are incorporated herein by this reference. Petitioners
resided in Santa Ana, California, when they filed their petition.
The Fitch Property Transaction
At all relevant times petitioner Robert K. Lowry
(petitioner) was a 50-percent partner in Lowry Wells Investments
(the Partnership), which owned the Fitch Property, located in
Irvine, California. The other 50-percent partner was George
Wells.
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