Robert C. Davis, Jr. - Page 12

                                        -12-                                          
          exchange for $1,500,000.                                                    
               On August 20, 2003, respondent issued to petitioner a notice           
          of deficiency (notice) with respect to petitioner’s taxable year            
          2000.  In that notice, respondent determined, inter alia, that              
          petitioner is liable for the taxable year at issue for the                  
          respective additions to tax under sections 6651(a)(1) and                   
          6654(a).                                                                    
               On October 26, 2004, respondent received Form 1040, U.S.               
          Individual Income Tax Return, with respect to petitioner’s                  
          taxable year 2000 (petitioner’s Form 1040 for 2000), which                  
          respondent did not process as a return.  In that form, peti-                
          tioner, inter alia, claimed a $256,975 deduction under section              
          165 for a theft loss with respect to the custom house.                      
               On November 1, 2004, a jury awarded petitioner and Ms. Davis           
          $524,727 in compensatory damages (insurance litigation verdict)             
          with respect to the insurance litigation counterclaim.  The jury            
          found, inter alia, that the property damages that petitioner and            
          Ms. Davis sustained were not fully satisfied by the $1,500,000              
          paid to them pursuant to the May 1, 2003 settlement agreement.              
          As of the time of the trial in this case, the Maryland Circuit              
          Court was considering in the insurance litigation numerous                  
          posttrial motions and had not reduced the insurance litigation              
          verdict to final judgment.                                                  







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Last modified: May 25, 2011