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4. Whether Hamalee had a net operating loss (NOL) in 1989,
that the Lees may carry back to the subject years. We hold it
did not.1
5. Whether petitioners are liable for the additions to tax
for fraud determined by respondent. We hold they are to the
extent stated herein.
6. Whether petitioners are liable for the additions to tax
for substantial understatements determined by respondent. We
hold they are.
Unless otherwise stated, 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.
We separately refer to Chong-Kak and Sang-Ok Lee as Mr. Lee and
Mrs. Lee, respectively. We collectively refer to Mr. Lee and
Mrs. Lee as the Lees. We refer to the Lees' daughter, Inae Lee,
as Ms. Lee. We refer to the Lees' son-in-law, Ick Soo Won, as
Mr. Won. We refer to Hamalee Distributors, Inc., as Hamalee.
We refer to Myun Suk Chong as Ms. Chong.
FINDINGS OF FACT
1 Our resolution of this issue moots another issue raised by
the parties as to Mr. Lee's basis in his Hamalee stock on
Dec. 31, 1989.
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