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MEMORANDUM FINDINGS OF FACT AND OPINION
LARO, Judge: This case is before the Court on the petition
of Maschmeyer’s Nursery, Inc., to redetermine deficiencies and
accuracy-related penalties determined by respondent as follows:
Penalty
Year Deficiency Sec. 6662(a)
1989 $47,284 $9,457
1990 47,762 9,552
1991 43,777 8,755
The issues for decision are: (1) Whether annual payments
made by petitioner to its sole shareholder and his wife under a
lease of undeveloped land are deductible by petitioner as rent to
the extent that they exceed $65,000; (2) whether improvements to
a residence located on petitioner’s premises and used by its sole
shareholder qualify as property used in a trade or business for
which depreciation deductions claimed by petitioner are
allowable; and (3) whether petitioner is liable for accuracy-
related penalties under sections 6662(a) and (b)(1).1
FINDINGS OF FACT
Some of the facts have been stipulated, and are so found.
The stipulations and attached exhibits are incorporated herein by
this reference. Petitioner is an Indiana corporation with its
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 Procedures.
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