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station to Sembler in 1998. The Gownis were limited to
recognizing $3,000 of this loss in 1998. The Gownis identified
Mina of Forest City, Mina of Sanford, Shenody, and Bishoy as
S corporations on this return. Bradshaw prepared the Gownis’
1998 return.
On their joint income tax return for 1999, the Gownis
reported the following sources of income and loss:
Source Amount of Income (Loss)
Wages $39,475
Taxable interest 827
Long-term capital loss carryover (42,000)
Mina of Sanford (10,023)
Shenody (6,325)
Bishoy 2,647
The Gownis reported taxable income of zero for 1999. The Gownis
were limited to recognizing $3,000 of their reported $42,000
long-term capital loss carryover in 1999. The Gownis identified
Mina of Sanford, Shenody, and Bishoy as S corporations on this
return. Bradshaw prepared the Gownis’ 1999 return.
The Gownis requested an extension to file their 1999 return.
Their first request extended the time to file to August 15, 2000.
Their second request extended the time to file to October 15,
2000. On Form 4868, Application for Automatic Extension of Time
to File U.S. Individual Income Tax Return, the Gownis estimated
that their total tax liability for 1999 was zero. The Gownis’
1999 return was received by the IRS on November 6, 2000, in an
envelope with a postage meter date of November 3, 2000.
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