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was counted twice (as a deduction) on the electronically stored
version of the Form 1120S, resulting in an erroneous $173,093
understatement of ordinary income from Windsor's operations on
the electronically stored Form 1120S; namely, $414,845 rather
than $587,938. As petitioner was Windsor's sole shareholder, a
corresponding error was carried through to the electronically
stored version of the Schedule K-1 for petitioner, so that it
likewise reported $414,845 rather than $587,938 as petitioner's
share of ordinary income.
After the Form 1120S had been filed, Sahmel prepared
petitioner's 2001 Form 1040, U.S. Individual Income Tax Return.
Following OSG standard practice, Sahmel used the electronically
stored version of petitioner's Schedule K-1 from Windsor to
prepare the Form 1040. That version, however, contained the
$173,093 understatement of ordinary income as $414,845 rather
than $587,938. The erroneous $414,845 figure for Windsor's
ordinary income was entered once on a worksheet accompanying
petitioner's Schedule E, Supplemental Income and Loss. On the
worksheet, the $414,845 figure was offset by $36,417 in
supplemental business expenses before being recorded on the face
of the Schedule E as $378,428 in income from Windsor. The Form
1040 was signed by Sahmel as preparer and by petitioner.
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