-18-
9. Relevant Financial Information
Funny Hats filed a Form 1065, U.S. Partnership Return of
Income, for each year from 1994 through 2000. These returns
state that the principal business activity of Funny Hats is
“rental” and that its principal product or service is “real
estate”. According to the returns, Funny Hats received rent and
incurred related expenses, depreciation, and net losses as
follows:7
1994 1995 1996 1997 1998 1999 2000
Gross rents $11,250 $7,200 $9,600 $10,200 $6,000 $17,000 $4,000
Cash expenses:
Insurance -0- -0- 2,279 100 1,203 1,208 1,208
Legal fees 280 521 649 663 691 747 942
Taxes -0- 8,940 9,072 9,251 9,501 4,819 10,309
Miscellaneous -0- 19 -0- 33 -0- -0- -0-
Travel -0- -0- -0- -0- -0- -0- 6,397
Business meals -0- -0- -0- -0- -0- -0- 769
Repairs & maint.8,663 401 238 2,265 4,216 5,343 531
Exterminating -0- 76 81 -0- 81 119 -0-
Bank charges -0- -0- -0- 13 10 96 100
8,943 9,957 12,319 12,235 15,702 12,332 20,256
Depreciation1 8,364 8,773 8,921 9,003 8,947 9,022 7,975
17,307 18,730 21,240 21,328 24,649 21,354 28,231
Net loss 6,057 11,530 11,640 11,128 18,649 4,354 24,231
1Funny Hats claimed depreciation on the entire house and not just on the
portion of the residence that was purportedly rented to decedent.
Funny Hats also reported for 1997 through 2000 that it had
received interest income of $529, $177, $73, and $580,
respectively. Funny Hats also reported for 2000 that it had
realized a $51,418 “net section 1231 gain”.
7 Funny Hats also filed a 1993 Form 1065 that did not report
any income or expense. The 1993 Form 1065 reported that the
residence was an asset of Funny Hats and that the principal
business activity of Funny Hats was “inactive”.
Page: Previous 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 NextLast modified: May 25, 2011