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Penalty, I.R.C.
Year Deficiency Sec. 6662(a)
1994 $35,283 $3,683
1995 17,023 3,202
The issues presented are: (1) Whether rental real estate
losses claimed by petitioners are subject to the passive activity
loss limitations under section 469; (2) whether interest paid on
tax deficiencies is deductible as Schedule C business expenses;
and (3) whether petitioners are liable for accuracy-related
penalties under section 6662(a). Unless otherwise indicated, all
section references are to the Internal Revenue Code in effect for
the years in issue.
FINDINGS OF FACT
Some of the facts have been stipulated, and the stipulated
facts are incorporated in our findings by this reference.
Petitioners’ mailing address at the time of the filing of the
petition was Cudjoe Key, Florida. Petitioners filed joint
Federal income tax returns for 1994 and 1995.
United Air Temp
Petitioner William C. Fowler (petitioner) was employed by
and the president of United Air Temp, Air Conditioning and
Heating, Inc. (United Air Temp). Petitioner Cheryl M. Fowler
(Mrs. Fowler) was employed as a corporate executive for United
Air Temp. United Air Temp was a closely held C corporation that
was 100-percent owned by petitioner.
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