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The Lees, docket No. 4498-94
Additions to Tax
Sec. Sec. Sec. Sec. Sec.
Year Deficiency 6653(b)(1)6653(b)(2) 6653(b)(1)(A) 6653(b)(1)(B) 6661
1985 $113,035 $56,518 1 --- --- $28,259
1986 195,770 --- --- $146,828 2 48,943
1987 182,440 --- --- 136,830 3 45,610
1988 155,509 116,632 --- --- --- 38,877
150% of the interest due on $113,035.
250% of the interest due on $195,770.
350% of the interest due on $182,440.
Hamalee, docket No. 4503-94
Taxable Additions to Tax
Year Sec. Sec. Sec. Sec. Sec.
Ended Deficiency 6653(b)(1) 6653(b)(2) 6653(b)(1)(A) 6653(b)(1)(B) 6661
3/31/86 $245,998 $122,999 1 --- --- $61,499
3/31/87 253,945 --- --- $190,459 2 63,486
150% of the interest due on $245,998.
250% of the interest due on $253,945.
Following the consolidation of their cases for trial, briefing,
and opinion, we must decide:
1. Whether Hamalee underreported its taxable income for its
taxable years ended March 31, 1986 (1985 taxable year), March 31,
1987 (1986 taxable year), December 31, 1987 (1987 taxable year),
and December 31, 1988 (1988 taxable year). We hold it did.
2. Whether Mr. Lee received unreported distributions from
Hamalee during 1985, 1986, and 1987. We hold he did.
3. Whether Hamalee may deduct certain unreported expenses
that it allegedly paid in cash. We hold it may not.
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