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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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