Dennis W. Farley, Jr. and Janice J. Farley - Page 11

                                       - 10 -                                         

               Because petitioner’s interest rate was not reasonable, the             
          10-percent additional tax is due on the periodic distributions.             
          The Court finds it unnecessary to address respondent’s                      
          alternative contention that the annual distributions to                     
          petitioner were not equal.                                                  
               Reviewed and adopted as the report of the Small Tax Case               
          Division.                                                                   


                                                  Decision will be entered            
                                             for respondent.                          





























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