- 95 -
Deductions, etc., that were attached to Zephyr’s Forms 1120S for
1987 through 1989:
Year Item Amount
1987 Ordinary loss from business activities ($179,025)
Interest income 511
Net long-term capital gain 4,323
1988 Ordinary loss from business activities (797,252)
Interest income 838
1989 Ordinary loss from business activities (651,355)
Interest income 75
B. As Reported on the Roses’ Income Tax Returns
On their joint income tax returns for 1990 through 1992, the
Roses reported losses of $11,941, $868,812, and $651,355,
respectively, with respect to their interest in Zephyr.
The Roses attached the following statement, in pertinent
part, to their joint income tax return for 1990:
The above mentioned taxpayers have elected to
carryforward the net operating lossess [sic] of the
following companies for the tax period ending 12/31/90:
* * * * * * *
The amount of $83,501.00 of unapplied net operating
loss from Zephyr Rock & Lime Inc., (1987) * * * was
carried forward to 1990. Of this amount, $11,941 was
applied in 1990 (Schedule E, line 31a) and the balance
of $71,560 carried forward.
In addition, unused outstanding amounts have been
carried forward: Zephyr Rock & Lime Inc., (1988)
$797,252, * * * Zephyr Rock & Lime Inc (1989) of
$651,355 * * *
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