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Petitioner and Ms. Ferrando-Teymourian jointly filed a
Federal individual income tax return for 2000, reporting $797,682
of adjusted gross income and $637,805 of taxable income. They
did not report the disbursements made by Caspian as income, nor
did they report rental income.
During the years in issue, Caspian made no formal
declaration or payment of a dividend. Petitioner and Caspian did
not execute formal loan instruments with respect to the amounts
disbursed to or paid on behalf of petitioner.
In the fall of 2001, respondent’s examining agent, Roseann
Kacheris (Ms. Kacheris), began investigating Caspian’s corporate
tax returns for 1999 and 2000. During the course of her
investigation, she also examined petitioner’s individual income
tax returns for the years in issue.
On July 24, 2003, respondent issued petitioner a notice of
deficiency for 1999 and 2000. In the notice, respondent made the
following increases to petitioner’s taxable income:
1999
Type of Adjustment Amount of Increase
Capital gain $137,880
Itemized deductions 24,149
Exemptions 5,155
Rental income 19,800
Dividends 647,290
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Total Adjustments for 1999: $834,274
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