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food) and (2) the utilities, property tax, and insurance for the
farmhouse. In addition, Wolf Creek Farm paid Mr. Tschetter’s
medical care expenses.
Wolf Creek Farm did not pay dividends for its fiscal years
ended November 30, 1995, 1996, and 1997.
F. Income Tax Returns
Mr. Bleeker (petitioners’ counsel) prepared Mr. Tschetter’s
Forms 1040, U.S. Individual Income Tax Return, and Wolf Creek
Farm’s Forms 1120, U.S. Corporation Income Tax Return, for the
years at issue.
1. Wolf Creek Farm
Wolf Creek Farm filed timely its Forms 1120 for its fiscal
years ended November 30, 1995, 1996, and 1997. On these returns,
Wolf Creek Farm reported total income and total deductions as
follows:
11/30/95 11/30/96 11/30/97
Total income $38,269 $53,676 $46,793
Total deductions 38,114 52,963 43,405
Taxable income 155 713 3,388
Included in the total expenses deducted by Wolf Creek Farm
were the following items for food, lodging, and medical expenses
provided to Mr. Tschetter (amounts are rounded to the nearest
dollar):
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