-7- and Quist and help resolve his precarious financial situation. The loans from Mr. Jain and InfoSpace were secured by Mr. Facq’s options and, in the case of the loan from Mr. Jain, Mr. Facq’s InfoSpace shares. Despite all the margin calls, Mr. Facq continued to purchase items using the account. Because the margin account lacked sufficient assets, Mr. Facq had to accept a $5 million loan from Mr. Jain to satisfy a contract he made to purchase a home on Mercer Island, Washington. Mr. Facq also wanted to keep his shares in InfoSpace in case the stock rebounded. He tried to borrow from InfoSpace to pay down the margin loans so that the shares in his margin account would not be sold to satisfy his debt. This was to no avail, however. Mr. Facq transferred his account to Salomon Smith Barney in September 2000. In 2001, Salomon Smith Barney was forced to sell all the shares of InfoSpace that Mr. Facq owned to meet the margin requirements. Petitioners’ Return Petitioners timely filed their Federal income tax return for 2000. Petitioners reported $46,414,655 of income for the year and tax due of $18,341,070, while the W-2, Wage and Tax Statement, from InfoSpace reported that Mr. Facq received $63,327,671.77 of income in 2000. Petitioners attached a Form 8275, Disclosure Statement, to their return that cited section 1.83-3(k), Income Tax Regs., to explain the approximate $16.9 million difference between the amount of gross income shown onPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011