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Additions to Tax or Penalties
Section Section Section Section Section Section
Year Deficiency 6651(a)1 6653(a)(1) 6653(a)(2) 6653(a)(1)(A) 6653(a)(1)(B) 6656(a)
1984 $65,466 $16,366 $3,273 * $ -- -- $6,547
1985 124,338 31,085 6,217 * -- -- 12,434
1986 186,183 46,546 -- -- 9,309 * 18,618
* 50 percent of the interest due on the portion of the underpayment attributable to
negligence. Respondent determined that the entire underpayment was attributable to
negligence.
In a separate notice of transferee liability, respondent
determined that petitioner is liable as a transferee of BOT
Building Corp. (BOT) for the following deficiencies in, additions
to, and penalties on BOT's withholding tax:
Additions to Tax or Penalties
Section Section Section Section Section Section
Year Deficiency 6651(a) 6653(a)(1) 6653(a)(2) 6653(a)(1)(A) 6653(a)(1)(B) 6656(a)
1984 $95,751 $23,938 $4,788 * $ -- -- $9,575
1985 93,739 23,435 4,687 * -- -- 9,374
1986 35,778 8,945 -- -- 1,789 * 3,578
* 50 percent of the interest due on the portion of the underpayment attributable to
negligence. Respondent determined that the entire underpayment was attributable to
negligence.
The following issues remain for decision:
(1) Was the interest paid by Radcliffe and by BOT with
respect to the loan2 transactions at issue subject to withholding
tax under section 1442(a)? We hold that it was to the extent
1 Unless otherwise indicated, all section references are to the
Internal Revenue Code (Code) in effect for the years at issue and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
2 The words "loan", "lend", "interest", "fund", "funded", "se-
cure", "security", "pledge", "payment", "lien", "guaranteed",
"collateral", and similar words are used herein to describe the
form of the transactions at issue and do not reflect acceptance
by the Court that the substance of the transactions follows the
form thereof.
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Last modified: May 25, 2011