Kenneth and Dorothy Hitchen - Page 9

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               For 1987, petitioners filed a return that reflected a                  
          partnership loss of $4,226 and a farming loss of $45,030,                   
          resulting in zero regular tax liability but an alternative                  
          minimum tax liability of $462.  Petitioners filed with their 1987           
          return a Form 3800, General Business Credit, on which they                  
          claimed a “tentative general business credit” of $21,765.                   
          Although the record is not clear, it appears that the source of             
          this credit was a carryforward from the 1986 taxable year.                  
          Because petitioners reported zero regular tax liability in 1987,            
          none of this claimed credit was used by petitioners to offset any           
          tax liability for 1987.                                                     
               After filing their 1987 return, petitioners filed a Form               
          1045, Application for Tentative Refund, on which they requested             
          refunds with respect to their 1984, 1985, and 1986 taxable years,           
          based on the carryback of the unused general business credit                
          claimed on the 1987 return.  On this form, petitioners reported             
          the following adjusted total tax liabilities:                               
                                            1984       1985       1986               
          Income tax                         $7,586     $7,401     $8,483             
          General business credit            (7,586)    (7,326)    (7,479)            
          Other credits                      -0-        (75)       -0-                
          Regular tax liability              -0-        -0-      1,004                
          Alternative minimum tax liability     142        484      1,491             
               Total tax liability              142        484      2,495             
               For 1988, petitioners filed a return that reflected a                  
          farming loss of $39,443, resulting in zero tax liability.                   







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