Robert G. and Lana L. Gale - Page 5

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                 Liabilities                      Totals                              
                 1st mortgage                    61,616                               
                 2nd mortgage                    40,774                               
                 RC Willey                       1,300                                
                 Providian                       2,250                                
                 Chase Mastercard                5,000                                
                 AmeriCredit                     32,465                               
                 Medical                         550                                  
                 Medicine                        900                                  
                 Discover card                   2,500                                
                 Texaco                          1,500                                
                 Mrs. Gale’s student loan        6,000                                
                 Dentist                         1,100                                
               Petitioners purchased the 2001 Blazer in January 2001 for              
          $32,000.  Mr. Gale estimated that the Blazer was worth $25,000              
          when the second mortgage was canceled.  He did not consult any              
          publication showing used car values.                                        
               Petitioners’ records do not show the value of Mr. Gale’s               
          CSRS pension benefit or thrift savings account at the time the              
          second mortgage was canceled.  Mr. Gale believed that had he                
          retired in 2003, his CSRS pension benefit would have been                   
          approximately $858 per month.  Mr. Gale contributed to a thrift             
          savings account from about 1984 to 1990.  He did not make any               
          contributions to his thrift savings account after 1990.  In 1998,           
          Mr. Gale borrowed from his thrift savings account to make the               
          downpayment on the house.                                                   
               Petitioners employed Julie K. Young of JKY Tax Service to              
          prepare their 2003 Form 1040, U.S. Individual Income Tax Return.            
          Petitioners jointly filed the return prepared by Ms. Young.                 






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