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petitioner’s percent ownership of Topaz’s stock.
Topaz’s Returns
Topaz reported a $2,509 loss on its Form 1120S, U.S. Income
Tax Return for an S Corporation, for the year 1996. On Schedule
D, Capital Gains and Losses, Topaz reported a $709,297 gain from
the sale of Aptus stock.
Topaz reported a $284,434 loss on its Form 1120S for the
year 1997.4 The portion of the return labeled Tax and Payments
is blank. In the Income (Loss) section of Schedule K,
Shareholders’ Shares of Income, Credits, Deductions, etc., Topaz
claimed an $894,722 loss on the Other Income (loss) line. Also
written on the line is “See Sch.” The attached document labeled
Form 1120S, Page 3, Schedule K, Line 6-Other Income (Loss), shows
an $894,722 long-term business loss. Also on its Schedule K,
Topaz claimed a $1,180,895 loss on the Income (loss) line in the
Other section.
On the attached Schedule D, Capital Gains and Losses and
Built-In Gains, an $894,722 long-term capital loss is listed on
the sale of Aptus Stock. Reported on the schedule is an $894,722
basis, and the column labeled Sales price is blank.
Topaz did not file a Form 1120S for the taxable years 1998,
1999, and 2000.
4 Respondent stated at trial that the return was timely
filed. We note that the return was signed by petitioner on May
11, 2004.
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