- 2 -
Background
Petitioner resided in Valencia, California, when his
petition was filed.
During 2002 (and apparently in 2003 as well), petitioner
owned a 10-percent interest in Great American Poolcare, LLC
(Great American). Great American filed a Form 1065, U.S. Return
of Partnership Income, for 2002, which reported a loss of
$166,743.2 Great American attached to its 2002 return a Form
4562, Depreciation and Amortization, that showed a tentative
section 179 deduction of $21,028. However, because of the
applicable business income limitation,3 the deduction was not
claimed on Great American’s 2002 return or utilized in the
calculation of Great American’s 2002 loss. Instead, Great
American carried over its tentative 2002 section 179 deduction to
2003.
Sometime before August 29, 2005, respondent examined
petitioner’s 2002 and 2003 returns, including petitioner’s
distributive share of Great American’s 2002 net loss. On
2Respondent ultimately conceded the audit adjustments to
Great American’s 2003 return. Consequently, the record does not
include the details of Great American’s return for 2003.
3Under sec. 179(b)(3), the amount allowed as a deduction is
limited to the taxpayer’s aggregate taxable income derived from
the active conduct of a trade or business. Since Great American
reported a loss, it could not claim the deduction under sec. 179.
Sec. 179(b)(3)(B) allows a taxpayer to carry over an unused
deduction to future years in which the taxpayer reports taxable
business income.
Page: Previous 1 2 3 4 5 6 7 8 9 Next
Last modified: March 27, 2008