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to the 25-percent interest in the Happy Valley property formerly
owned by Mr. Walker.
Coburn also prepared Mr. Walker’s 1997 Federal income tax
return (1997 return), which Mr. Walker filed on or about May 25,
1998. On his 1997 return, Mr. Walker reported a gain on the sale
of a 25-percent interest in the Happy Valley property. Had
Coburn been provided with the Settlement Agreement and quitclaim
deed that transferred Mr. Walker’s 25-percent interest in the
Happy Valley property to petitioner, he would not have reported
any gain from the sale of the Happy Valley property to Parker
Development on Mr. Walker’s 1997 return.
In January 2000, Mr. Walker gave to Coburn a copy of the
Settlement Agreement that petitioner had signed on September 22,
1997, and which was attached to the quitclaim deed of
September 26, 1997, and requested that Coburn amend his 1997
return. Mr. Walker also supplied to Coburn a copy of the
quitclaim deed. Accordingly, in March 2000, Mr. Walker filed an
amended Federal income tax return for 1997 to remove from his
taxable income the gain on the sale of the Happy Valley property.
When Coburn told petitioner that Mr. Walker had amended his
1997 return, petitioner responded by telling him that the
Settlement Agreement related to a transaction that had not
occurred. Consequently, petitioner did not amend her 1997 and
1998 returns.
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