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from the Anis partnership or from the May 30, 1995, transfer of
assets from the Stovers.
2. 1998
Petitioners obtained extensions to file their 1998
individual income tax return on April 15, 1999, and October 15,
1999. Petitioners estimated that their tax liability for 1998
was $41,000, which they paid when they requested the first
extension.
Petitioner took various documents, including the Schedules
K-1 issued to Drew and Allison Graham for 1998 by the Anis
partnership, to Lewellen around October 10, 1999, so he could
prepare petitioners’ 1998 return. Petitioners gave Lewellen
their Quicken records for 1998 so Lewellen could prepare the
Schedule C for petitioner’s law practice. These included a
profit and loss statement dated October 12, 1999, a check
register report dated July 28, 1999, and monthly statements and
canceled checks for the business bank account.
Petitioners reported $503,549 as gross revenue from
petitioner's law practice on their original 1998 income tax
return. Lewellen did not include fees totaling $135,421.64 that
petitioner received from Arnett, Chen, and Markam in the income
reported on petitioners’ 1998 return. Lewellen reported the
distributive loss from the partnership on Schedule E,
Supplemental Income and Loss, of petitioners’ 1998 return, and
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