Alondra Industries, Limited, d.b.a. Accent Insulation Company and Subsidiaries, et al. - Page 3

                                          3                                           
               The issues for decision are (1) whether the burden of proof            
          should be shifted from corporate petitioners to respondent with             
          respect to the issues of substantiation of claimed expenses for             
          rent and management fees; (2) whether disputed amounts of                   
          $26,881, $3,721, and $3,136 allegedly paid respectively by                  
          Alondra, Edco, and Pertinax to Joel Munro (Mr. Munro) for rent              
          are deductible by petitioners as ordinary and necessary business            
          expenses; (3) whether and to what extent $1,000,112 paid to Mr.             
          Munro is deductible by Pertinax as reasonable compensation; (4)             
          whether disputed amounts of $906,879 and $9,922 allegedly paid              
          respectively by Alondra and Edco to Pertinax as management fees             
          are deductible by Alondra and Edco as reasonable compensation;              
          (5) whether disputed amounts of $884,148 and $35,671 paid                   
          respectively by Alondra and Edco to Pertinax for wages paid to              
          employees of Pertinax, some of whom also served as officers of              
          Alondra and Edco, are deductible by Alondra and Edco as ordinary            
          and necessary business expenses; (6) the proper tax treatment of            
          unreasonable compensation routed to Mr. Munro by Alondra and Edco           
          through Pertinax; and (7) whether Alondra and Edco are liable for           
          additions to tax for negligence under section 6653(a)(1)(A) and             
          (B)2 and Alondra is liable to the addition to tax for substantial           
          understatement under section 6661(a).                                       

          2Unless otherwise indicated, all section references are to                  
          the Internal Revenue Code in effect for the years at issue.  All            
          Rule references are to the Tax Court Rules of Practice and                  
          Procedure.                                                                  




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