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to avoid income tax with respect to its shareholders.
2. Held, further, most of the legal expenses in
issue are not deductible under sec. 162, I.R.C.
3. Held, further, M had constructive dividend
income.
4. Held, further, NITCO is liable for the
additions to tax.
5. Held, further, M and M’s wife are liable for
the additions to tax.
David J. Duez, Gail H. Morse, and Roger W. Wenthe, for
petitioners.
Marjory A. Gilbert, Linda Grobe, and Claire McKenzie, for
respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
RUWE, Judge: Respondent determined deficiencies in
petitioners' Federal income taxes and additions to tax as
follows:
Northwestern Indiana Telephone Co.
docket No. 7970-91
Additions to Tax
Sec. Sec. Sec. Sec.
Year Deficiency 6653(a)(1)(A) 6653(a)(1)(B) 6661 6662
1987 $786,115.00 $39,305.75 1 $182,675.75 --
1988 429,006.00 21,450.30 -- 101,935.50 --
1989 329,369.00 -- -- -- $23,509.40
150 percent of the interest due on $55,412.
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