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Respondent’s Amendment to Answer
Citrus County Property: Respondent originally determined that petitioner
realized $49,907 as forgiveness of indebtedness income in 1987. Respondent
alternatively alleges that petitioner realized $112,156 of ordinary income
from the sale of that property in 1985.
Tai Property: Respondent alleges that petitioner realized additional income
of $50,863 from the sale of real property in 1985.
As a result of those allegations, respondent asserts an additional deficiency
of $80,523. Thus, respondent claims a total revised income tax deficiency of
$167,056 for 1985.
Respondent also alleges that those items of income were omitted with
fraudulent intent to evade tax and asserts an increased sec. 6653(b)(1)
addition to tax of $40,402 (revised addition to tax for fraud of $84,188 for
1985), and an increased sec. 6653(b)(2) addition to tax of 50 percent of the
interest due on the revised underpayment of $167,056.
Total adjustments to Schedule C income: $163,019
Taxable income from notice of deficiency: $202,816
Corrected taxable income: $365,835
Tax: $163,321
Self-employment tax: $4,673
Total corrected tax liability: $167,994
Total tax shown on return or as previously adjusted: $1,320
Adjustment to earned income credit: ($382)
Deficiency - increase in tax: $167,056
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