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3. Whether petitioner MTS International, Inc., may deduct
$196,672 for travel and entertainment expenses for 1987. We hold
that it may not.
References to petitioner are to Robert C. Hughes III.
References to petitioner corporation are to MTS International,
Inc. 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.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
A. Petitioner and Petitioner Corporation
Petitioner resided in Prospect, Kentucky, when he filed the
petition in this case.
Petitioner corporation had its principal place of business
in Louisville, Kentucky, during the years in issue. Petitioner
has been the sole shareholder, director, and president of
petitioner corporation at all times since it was incorporated.
Petitioner controlled petitioner corporation, including its
financing, dividends, and loans.
Petitioner corporation was in the business of collecting
debts for creditors. It was also in the factoring business;
i.e., it bought accounts receivable from businesses for a
percentage of face value and then tried to collect the
receivables.
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