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Taxable Year Additions to Tax Penalty
Ended Sec. Sec. Sec.
August 31 Deficiencies 6651(a)(1) 6653(a) 6662
1989 $656 $164 $6,615 ---
1990 20,000 5,000 --- $4,000
1991 36,133 9,033 --- 7,227
Following concessions, we must decide:
1. Whether petitioner’s payments to an escrow account (the
Fund) are deductible as ordinary and necessary business expenses.
We hold they are not.
2. Whether petitioner’s payments to its sole shareholder
are deductible as interest. We hold they are not.
3. Whether petitioner is liable for the additions to tax
for delinquency determined by respondent under section
6651(a)(1). We hold it is.
4. Whether petitioner is liable for the addition to tax for
negligence or intentional disregard of rules or regulations
determined by respondent under section 6653(a). We hold it is.
5. Whether petitioner is liable for the accuracy-related
penalties for negligence or intentional disregard of rules or
regulations determined by respondent under section 6662. We hold
it is.
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.
Dollar amounts are rounded to the nearest dollar. We refer to
Harry V. Mohney as Mr. Mohney. We refer to petitioner’s taxable
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Last modified: May 25, 2011