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Robert G. and Myrtis Mussman
docket No. 7971-91
Additions to Tax
Sec. Sec. Sec.
Year Deficiency 6653(a)(1) 6661 6662
1988 $74,850.00 $3,742.50 $18,712.50 --
1989 127,004.00 -- -- $25,400.80
After concessions, the issues we must decide are: (1)
Whether petitioner Northwestern Indiana Telephone Co. (NITCO)
permitted its earnings to accumulate beyond the reasonable needs
of the business during the years 1987, 1988, and 1989; (2)
whether NITCO was availed of for the proscribed purpose of
avoiding income tax with respect to its shareholders and is
liable for the accumulated earnings tax under section 531,2 for
1987, 1988, and 1989; (3) whether NITCO, for 1987, 1988, and
1989, is entitled to business deductions for certain legal
expenses it incurred and/or paid; (4) whether petitioner Robert
G. Mussman received constructive dividend income in the years
1988 and 1989; and (5) whether petitioners are liable for
additions to tax.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulation of facts, first and second supplemental
2Unless otherwise indicated, all section references are to
the Internal Revenue Code as in effect for the years in issue,
and all Rule references are to the Tax Court Rules of Practice
and Procedure.
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