Kenneth W. Stejskal, Sr. and Jane Stejskal, et al. - Page 3

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                    4.  All substantiated expenses allowed under the                  
               I.R.C. attributable to Stejskal Enterprises Trust,                     
               Bioactive Kansas Trust, and Total Health Center Trust                  
               are properly reportable by Petitioners Kenneth W.                      
               Stejskal, Sr. and Jane Stejskal on their Individual                    
               Income Tax Return, Form 1040.                                          
          At trial, petitioners conceded the addition to tax under section            
          6651(a)(1) and the penalty under section 6662 with respect to               
          Kenneth W. Stejskal, Sr., and Jane Stejskal (petitioners).  After           
          these concessions, the issues for decision are whether gross                
          receipts reported by Bioactive Kansas Trust were counted twice              
          when the income of the several trusts was reallocated to                    
          petitioners and whether petitioners are entitled to cost of goods           
          sold in excess of that allowed by respondent.                               
                                  FINDINGS OF FACT                                    
               Some of the facts have been stipulated, and the stipulated             
          facts are incorporated in our findings by this reference.                   
          Petitioners resided in Texas at the time that they filed their              
          petitions.  In 1977, petitioners incorporated Stejskal                      
          Enterprises, Inc.  Stejskal Enterprises, Inc., operated retail              
          stores in Kansas selling health supplements and other products.             
          Petitioners were corporate officers and were actively involved in           
          the operations of Stejskal Enterprises, Inc.                                
               Stejskal Enterprises, Inc., elected to be taxed as an S                
          corporation commencing on or about January 1, 1994.  During 1999,           
          the businesses formerly conducted by Stejskal Enterprises, Inc.,            
          were primarily conducted under the name Stejskal Enterprises                





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