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On April 27, 1990, petitioner sold his 50-percent interest
in M&V Investments (Tri-City and Newark Wreckers) to Mr. Viviano
for $200,000. The $200,000 purchase price was paid in the form
of three cashier’s checks for $100,000, $75,000,and $25,000,
which were initially made payable to Mr. Viviano but were
subsequently endorsed to petitioner. Pursuant to the sales
agreement, petitioner relinquished all claims he had in Tri-City
and Newark Wreckers, and he was discharged from his obligation to
pay on the note to Mr. Giarrusso.5 Petitioner did not report
this sale on his 1990 return.6
5The Escrow Statement, Bulk Transfer Escrow Instructions,
and Security Agreement list petitioner’s and Mr. Viviano’s
indebtedness to Mr. Giarrusso as $200,000. The 1990 Schedule L,
Balance Sheet, for Tri-City lists the indebtedness as $202,000.
Respondent describes petitioner’s indebtedness as being $101,000.
We assume respondent used the $101,000 as opposed to the $100,000
on the basis of Tri-City’s 1990 Schedule L. We further assume a
scrivener’s error on the part of Tri-City’s tax return preparer
for 1990 and assign no substantive significance to this
discrepancy.
6Petitioner did, however, attach a statement to his 1990
income tax return which states:
THE ABOVE NAMED TAXPAYER WAS INVOLVED IN A
PARTNERSHIP FOR PART OF THE 1990 TAX YEAR. THE
PARTNERSHIP WAS TRI-CITY TRUCK PARTS. THE
TAXPAYER DID NOT RECEIVE HIS SCHEDULE K-1 (SHARE
OF PARTNERSHIP INCOME & DEDUCTIONS) FOR 1990.
SEVERAL ATTEMPTS WERE MADE TO REACH THE DESIGNATED
PARTNER OF TRI-CITY TRUCK PARTS (PETER VIVIANO).
ALL ATTEMPTS WERE UNSECCESSFUL [sic]. AS A RESULT
THE ABOVE NAMED TAXPAYER WAS UNABLE TO REPORT HIS
SHARE OF THE PARTNERSHIP’S ACTIVITY FOR THE 1990
TAX YEAR.
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