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$295. Petitioner and Mr. Edwards do not financially support any
dependents. The combined wage and salary income of petitioner
and Mr. Edwards, who is employed as an environmental consultant
and community college teacher, was approximately $70,000 in both
2001 and 2002. Petitioner has individual retirement accounts
with balances of $3,895, $15,745, and $1,595; a savings account
with a balance of $3,335; and a checking account with a balance
of $1,635. Finally, petitioner owes approximately $8,900 on
credit card accounts, and she estimates her total monthly living
expenses to be $2,748.
III. Petitioner’s 1981 Tax Return and the ITC Carrybacks
Petitioner filed a joint Federal income tax return with Mr.
Barnes for the taxable year 1981. On the return, petitioner
claimed a deduction for an ordinary loss from RCR #1 of $29,520.
This deduction offset the combined wage income of $45,078,
resulting in an adjusted gross income of $15,558. In addition to
the deduction, petitioner reported a qualified investment of
$151,600 on a Form 3468, Computation of Investment Credit,
resulting in a tentative ITC of $15,160. Petitioner applied $287
of this credit against the 1981 tax liability, reducing the tax
liability to zero. The 1981 return reflected an overpayment
resulting in a refund of $8,257.
In addition to the 1981 return, petitioner filed a Form
1045, Application for Tentative Refund, on which she requested
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