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return was a Schedule C, Profit or Loss From Business, reflecting
that petitioner utilized the cash method of accounting.
The 1997 return reflected income tax due of $37,014. In
August 1998, respondent assessed the tax shown on the return as
well as additions to tax for failure to pay estimated tax and
failure to pay tax of $124 and $925.35, respectively. Including
interest, petitioner’s outstanding tax liability for 1997 was
$39,317.11 as of September 12, 2002, the date of the filing of
the NFTL.
On October 15, 2002, petitioner filed a Form 1040X, Amended
U.S. Individual Income Tax Return, for 1997 which reflected a net
operating loss carryback from 1999 and a total tax reduction of
$8,696. The IRS accepted petitioner’s Form 1040X and adjusted
his tax accordingly.1 Petitioner has not made any payments
toward his liability for 1997.
2. Petitioner’s 1998 Tax Return
Petitioner filed his 1998 Form 1040 on March 25, 2001,
reflecting a total tax of $2,290. Respondent assessed the tax
shown on the return as well as additions to tax for failure to
pay estimated tax, failure to pay tax, and failure to file timely
of $88, $245.88, and $442.57, respectively. Including interest,
petitioner’s outstanding tax liability for 1998 was $3,194.85 as
1Sec. 172(b) permits a 2-year carryback of net operating
losses from the year of the loss.
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