-3- whether petitioners are entitled to deduct $122,605 in 1986 for interest petitioner paid to Escondido Property Investment Corporation; and whether petitioners are liable for additions to tax under sections 6653(a)(2) and 6653(a)(1)(B) for 1985 and 1986, respectively, on the portion of the underpayment attributable to the transfer of the Escondido property to Balmac. All section references are to the Internal Revenue Code for the years in issue. All Rule references are to the Tax Court Rules of Practice and Procedure. FINDINGS OF FACT Some of the facts have been stipulated and are so found. The stipulation of facts and the attached exhibits are incorporated herein by this reference. Background Petitioners resided in San Diego, California, at the time they filed their petition. Petitioner completed 2 years of college and thereafter went to work for a company involved in real estate development. He remained there for approximately 10 years before going out on his own when he formed Balmac to engage in the development of real estate. At all relevant times, (1) petitioner owned all of the stock of Balmac, and (2) Balmac owned all of the stock of Westland Holding Corp., which in turn owned all the stock of Westland Title Co., Inc. (WTC). In 1978, petitioner purchased approximately 106 acres ofPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011