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The issues for decision are:
(1) Whether petitioner may amortize $383,400, or some other
amount, for Jane Grecco's covenant not to compete. We hold that
petitioner may amortize $324,100.
(2) Whether petitioner is liable for additions to tax for:
(a) Negligence under section 6653(a) for 1989; (b) valuation
overstatement under section 6659 for 1989; (c) substantial
understatement under section 6661 in the alternative to section
6659 for 1989; and (d) an accuracy related penalty under section
6662(h) for gross valuation misstatement, or, in the alternative,
under section 6662(a). We hold that it is not.
Section references are to the Internal Revenue Code in
effect for the years in issue. Rule references are to the Tax
Court Rules of Practice and Procedure.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
1. Formation of Petitioner and Petitioner's Operations
Petitioner had its principal place of business in Portland,
Oregon, during the years in issue and when it filed its petition.
Petitioner is in the business of marketing and distributing
bolts, nuts, and other fasteners.
Jane Grecco (Grecco), James Colbert (Colbert), and Dan Allen
(Allen) formed petitioner in 1979. They each had experience
distributing bolts, nuts, and other fasteners. Grecco and
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