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Specifically in and for 2001, WJS-LLP and WJS-Partnership
did not treat as income and did not report to respondent on
information returns, Forms 1065, any of the $201,919 in Federal
crop insurance proceeds that were received in 2001 with regard to
the sugar beet crops destroyed in 2001.
Rather, with the 2001 partnership information tax returns of
WJS-LLP and of WJS-Partnership, Forms 1065, elections under
section 451(d) were filed with respondent to defer reporting the
entire $201,919 in Federal crop insurance proceeds received in
2001 until 2002.
Petitioners filed their respective 2001 individual joint
Federal income tax returns, reporting thereon their respective
amounts of 2001 WJS-LLP and WJS-Partnership income, deductions,
and credits as reported by the partnerships (i.e., not reporting
any of the Federal crop insurance proceeds received in 2001).
On audit of petitioners’ respective individual joint Federal
income tax returns for 2001, respondent treated as income for
2001 all $201,919 of the Federal crop insurance proceeds WJS-LLP
and WJS-Partnership received in 2001, charged each petitioner
with additional income for his or her respective allocation
thereof, and determined the tax deficiencies and penalties at
issue.
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Last modified: March 27, 2008