-2-
as respondent contends, or as a return of capital, as petitioners
contend). In the event we accept respondent’s characterization of
these payments, then we must further decide whether petitioners are
liable for the section 6662(a) accuracy-related penalty.
All section references are to the Internal Revenue Code for
the year in issue, all Rule references are to the Tax Court Rules
of Practice and Procedure, and all dollar amounts have been
rounded.
Some of the facts have been stipulated and are found
accordingly. The stipulation of facts and the attached exhibits
are incorporated herein by this reference.
FINDINGS OF FACT
At the time they filed their petition, petitioners Max M. and
Joan E. Greenberg, husband and wife, resided in San Diego,
California. They timely filed a joint Federal income tax return
for 1990.
Pioneer Mortgage, Inc.
Pioneer Mortgage, Inc. (Pioneer Mortgage or the company) was
incorporated by Morrie Naiman (M. Naiman) on July 12, 1967. In
1975, M. Naiman died; thereafter his nephew, Gary Naiman (G.
Naiman) continued the business previously conducted by his uncle
(viz, the secondary mortgage market in the San Diego area) using
the Pioneer Mortgage name for several interrelated companies.1 G.
1 G. Naiman operated and controlled the following
(continued...)
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