- 2 -
invalidity of a claim. Held, further: It was
substantially unclear to P and his accountant that
settlement negotiations had concluded; any admissions
made are not admissible under Fed. R. Evid. 408. Held,
further: P’s loss was capital in nature. Held,
further: P is not liable for the accuracy-related
penalty under sec. 6662(a), I.R.C. for reasons stated
herein.
Steve Mather, for petitioner.
Mark A. Weiner, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
GERBER, Judge: Respondent determined a deficiency in
petitioner's 1987 Federal income tax in the amount of $94,794,
and an addition to tax pursuant to section 66611 in the amount of
$23,699. Respondent also determined a deficiency in petitioner's
1990 Federal income tax in the amount of $4,983 and an accuracy-
related penalty pursuant to section 6662(a) of $997.
The principal controversy here is whether petitioner has
established that his dominant motivation in guaranteeing the
floor plan line of credit was to secure or protect his trade or
business of being an employee. This, in turn, controls whether
petitioner is entitled to deduct a $400,000 payment made to a
bank as a business bad debt pursuant to section 166(a). If we
1 All section references are to the Internal Revenue Code in
effect for the years at issue, and all Rule references are to the
Tax Court Rules of Practice and Procedure, unless otherwise
indicated.
Page: 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