- 18 -
The Schedule K-1, Partner’s Share of Income, Credits, Deductions,
Etc., attached to petitioners’ return indicates that the DSBS 87-
C loss comprised of a “nonpassive activity deduction” of $18,810,
and a “special allocation deduction” of $26,700. The Schedule K-
1 also lists farm income of $22,199 as nonemployee compensation
earned by petitioners, and the schedule lists this amount as a
contribution to the partnership. A statement attached to the
return indicates that petitioners “contributed $2,000.00 in cash
to the partnership as part of his [sic] total cash contribution”
and that petitioners “should claim $2,000.00 as an I.R.A.
contribution for 1991" if they qualify. Another statement,
separately signed by petitioners, indicates that petitioners
materially participated in partnership-related activities–-on the
blank line following “The numbers [sic] of hours we spent working
in our business activity in 1991 was”, petitioners filled in “all
that was needed to be done.” The 1991 return was prepared by one
of Mr. Hoyt’s tax preparation services and was signed by Mr.
Hoyt. Mr. Hoyt signed the return on April 10, 1992, and
petitioners signed the return on April 14, 1992.
Petitioners remitted two payments to the Hoyt organization
during 1992, one in the form of a cashier’s check dated June 15,
1992, in the amount of $3,000, and a second payment in December
1992 in the amount of $1,250.
Upon signing the returns and forms prepared by the Hoyt
organization, Mr. Van Scoten did not know how the Hoyt-related
Page: Previous 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 NextLast modified: May 25, 2011