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substantial portion of his income. Without these items a
complete and accurate return cannot be prepared.” Petitioner
provided no Schedules K-1 to Mr. Kelly.7
On petitioner’s Form 1040, Schedule C, Profit or (Loss) From
Business or Profession, for 1985, petitioner listed his principal
business or profession as “Real Estate Development”. Petitioner
reported no income from gross receipts or sales, but he did
report $160,363 as “Other income Commissions, Fees & Interest”
and claimed deductions of $152,481. See appendix A. Petitioner
reported a net profit from his real estate development business
of $7,882 on his Form 1040. This was the only amount petitioner
reported as income for 1985. Petitioner reported taxable income
of $5,802 and a tax of $426.
On petitioner’s Form 1040, Schedule C, for 1986, petitioner
listed his principal business or profession as “Real Estate
Development”. He likewise reported no income from gross receipts
or sales, reported $119,772 as “Other income Commissions, Fees &
Interest”, and claimed deductions of $115,634. See appendix A.
Petitioner reported a net profit from his real estate development
business of $4,138 on his Form 1040. This was the only amount
7Mr. Kelly discussed Schs. K-1 with Mr. Miles and Mr.
Miles’s accountant. However, the accountant informed him that
Schs. K-1 would not be provided and that any information that
would have been on those schedules should be put on petitioner’s
personal income tax returns.
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