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Alfred Roven (an officer) and Joy Martin (specially
recognized), for petitioner.
Rebecca T. Hill and Bryce A. Kranzthor, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
LARO, Judge: American Underwriters, Inc., petitioned the
Court to redetermine respondent's determination with respect to
its 1987 and 1988 taxable years. For petitioner's taxable year
ended February 29, 1988, respondent determined a $1,012,554
deficiency and a $53,188 addition thereto under section
6653(a)(1)(A). Respondent also determined that the
time-sensitive provision of section 6653(a)(1)(B) applied to the
entire deficiency. For petitioner's taxable year ended
February 28, 1989 (petitioner's 1988 taxable year), respondent
determined a $261,672 deficiency and a $13,084 addition thereto
under section 6653(a)(1).
Following concessions, we must decide:
1. Whether certain advances were debt. We hold they were.
2. Whether any of these advances were worthless as of
February 29, 1988. We hold they were to the extent described
herein.
3. Whether petitioner is liable for the additions to tax
determined by respondent. We hold it is not.
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