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Wage income $72,690
Interest income 110
Rental property loss (2,534)
DSBS 87-A loss (27,170)
DSBS 87-C loss (32,306)
Farm income 8,681
Total income 19,471
The losses from DSBS 87-A and DSBS 87-C were reported on
Schedules K-1, Partner’s Share of Income, Credits, Deductions,
Etc., issued to both petitioners by the partnerships for the
partnerships’ taxable years ending in 1991. Although it appears
from the return that the farming income is related to
petitioners’ Hoyt investment, it is unclear how this amount of
income was calculated or earned. Petitioners reported a total
tax liability of $799 for 1991. Attached to the return was a
“Material Participation Statement”. On this statement,
petitioners averred that they spent 114 hours during 1991 working
in various Hoyt-related activities. The 1991 return was signed
by Mr. Hoyt as the return preparer on June 19, 1992, it was
signed by petitioners on June 27, 1992, and it was stamped
“Received” by respondent on July 23, 1992.
Starting with the Form 1045 and the 1987 return, and
continuing through the 1991 return, Mr. Hoyt or a member of the
Hoyt organization prepared petitioners’ tax forms. Upon signing
the returns, Ms. Hansen did not know how the Hoyt-related items
were derived; she knew only that Mr. Hoyt or a member of his
organization had entered the items on the Schedules K-1 and on
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