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petitioners to provide their books and records pertaining to
King’s Appliances. Mrs. King provided her spiral notebooks,
canceled checks, and most of the invoices.
Agent Davis asked petitioners to provide records showing the
cost of improvements at the South Oates building. Petitioners
did not provide any records.
Respondent determined that petitioners’ adjusted basis in
the South Oates property was $86,487; i.e., $75,000 for the
purchase of the building and $67,000 for improvements, minus
$55,513 for depreciation. Respondent determined that petitioners
had a $13,513 gain on the sale of the building in 1996 ($100,000
sale price less $86,487 adjusted basis).
Another revenue agent audited petitioners’ tax years 1997
and 1998. Respondent determined that petitioners’ adjusted basis
was $760,000 for the Ross Clark building and $40,000 for the
parking lot. Respondent determined that petitioners were
entitled to deduct depreciation in the amount of $26,492 for
1996-98.
F. Extension of Time To Assess Tax for the Years in Issue
From 1999 to 2002, respondent asked petitioners to execute
eight Forms 872, Consent to Extend the Time to Assess Tax, for
the years in issue and asked King’s Appliances, Inc., to execute
five Forms 872 for 1996-98.
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Last modified: May 25, 2011