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After concessions by the parties, the only issues remaining
for decision are whether petitioner is liable for the 1989 and
1990 accuracy related penalties for negligence and for a
substantial understatement of income tax.
FINDINGS OF FACT
Some of the facts have been stipulated, and the stipulated
facts are incorporated in our findings by this reference.
Petitioner had its principal place of business in Ohio at the
time the petition was filed. During the years in issue,
petitioner was in the business of manufacturing circuit boards.
United Circuits, Inc. (UCI), was owned by Frank Schubert
(Schubert) and Gary Jump (Jump). Schubert, the president of UCI,
was primarily responsible for overseeing the manufacturing
process and ensuring that the waste produced from the
manufacturing process was in compliance with Environmental
Protection Agency standards. Schubert's education and prior work
experience were in engineering.
Jump was the vice president and general manager of UCI.
Jump had various responsibilities that included reviewing UCI
financial information, making decisions about equipment
purchases, and working with Schubert on manufacturing matters.
Jump received a degree in marketing.
UCI employed Davidson Audit Company (DAC) to perform
accounting functions and to prepare UCI's financial statements
and tax returns. Eleanor Northcutt (Northcutt), an employee of
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