Calypso Music Incorporated - Page 1
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T.C. Memo. 2000-293
UNITED STATES TAX COURT
CALYPSO MUSIC INCORPORATED, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 12683-99. Filed September 20, 2000.
P was incorporated by K. K is a motion picture
music editor and P’s sole shareholder, director, and
officer. P contracted with motion picture studios for
K’s services as a music editor. Each of the contracts
was memorialized, in part, by a “loan-out agreement” or
a “deal memorandum”. Each contract made specific
reference to the services of K.
R determined P was a personal holding company as
defined in sec. 542 I.R.C. for its 1996 and 1997
taxable years. R also determined that P was liable for
accuracy related penalties under sec. 6662(a) I.R.C..
Held: P was a personal holding company for its
taxable years of 1996 and 1997.
Held, further: P in good faith and reasonably
relied on the return preparers for the position taken
on its returns and is not liable for penalties under
sec. 6662(a) I.R.C. pursuant to sec. 6664(c) I.R.C..
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