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Petitioners’ 2000 Federal Income Tax Return
Petitioners filed a 2000 Federal income tax return on
December 12, 2001.5 Respondent timely mailed a statutory notice
of deficiency to petitioners. Petitioners timely filed a
petition with this Court for a redetermination of the determined
deficiency and filed an amended petition on October 7, 2004.
Petitioners subsequently submitted an amended 2000 Federal income
tax return (amended tax return) in connection with respondent’s
Appeals Office review of the instant case. With the exception of
certain disputed deductions that are described in detail below,
the parties stipulate that the amended tax return accurately
reflects petitioners’ tax liability for 2000.
Discussion
The parties dispute whether petitioners are entitled to
deductions with respect to (1) the alleged abandonment of the
Vernon property by petitioner’s bankruptcy estate, (2) the
alleged theft of the diamond ring by Ms. Smith, (3) the alleged
failure of Ms. Smith to assume the obligation for the liens on
the Southampton property, and (4) the alleged failure of Ms.
Smith to file a proper 1986 Federal income tax return.
Deductions are a matter of legislative grace, and
petitioners bear the burden of proving that they are entitled to
5Petitioners had filed a request to extend the filing due
date to Oct. 15, 2001.
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