Faramarz and Mitra Elghanian - Page 13

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               A certified public accountant (C.P.A.) prepared petitioner’s           
          1986 income tax return on April 21, 1987.  In it, petitioner                
          reported no gross income and no tax due.                                    
               On November 5, 1987, petitioner’s C.P.A. prepared                      
          petitioner’s amended return for 1986.  In that return, petitioner           
          claimed a $9,339,066 loss on Form 4797, Gains and Losses From               
          Sales or Exchanges of Assets Used in a Trade or Business and                
          Involuntary Conversions.  The $9,339,066 loss was based on                  
          petitioner’s share of the family assets expropriated by the                 
          Iranian government.  Petitioner attached the following statement            
          to his amended 1986 return:                                                 
               The losses taken on Form 4797 represent taxpayers’                     
               losses of business assets in Iran.  They are based                     
               solely on the Census of Claims by United States Persons                
               Against Iran filed with the Office of Foreign Assets                   
               Control, Department of the Treasury, Washington, D.C.                  
               20220, by the taxpayers’ family.  The taxpayers’ family                
               has allocated to each family member their proportionate                
               interest in such assets.  The only losses taken were                   
               those the taxpayer deemed to be business assets and it                 
               is their contention that amount claimed are their                      
               costs.  The taxpayers determined that these assets were                
               only seized in 1986.  The tax preparers have not                       
               verified the assets, their costs or the year the loss                  
               was incurred.                                                          
          E.   Petitioner’s 1987-91 Income Tax Returns                                
               Petitioner filed returns for 1987-89, and petitioners filed            
          joint returns for 1990-91 in which they reported the following:             










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