- 62 - notices of deficiency in the instant cases, the limited partnership's formation was not an arm's-length transaction between the partners, and the limited partnership interest NITCO obtained was not commensurate with its relative capital contribution to the limited partnership. With respect to the retirement of NITCO's long-term debt, petitioners have established that in 1988 and 1989, NITCO made respective payments of $575,505 and $170,700 to retire the debt. Although the debt's outstanding principal amount was $669,530, NITCO was required to pay some additional interest and a prepayment penalty to retire the debt. With respect to NITCO's installation of fiber optic cable to connect its exchanges, Mr. Mussman testified that NITCO spent about $1 million to install the fiber optic cable during 1987 through 1989. On cross-examination, however, he admitted that his $1 million figure included NITCO's overhead costs, as NITCO's employees performed the installation work. Further, most of the cable to connect the exchanges was installed in 1987 and 1988. By 1989, NITCO was in the final stages of the connection work, and only a relatively short segment of cable remained to be installed once NITCO resolved an easement problem. We think Mr. Mussman's $1 million figure is high. Petitioners offered no specific additional evidence concerning the actual amounts NITCO spent to install the fiber optic cable during 1987 through 1989. Doing the best we can on the record presented, and bearingPage: Previous 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 Next
Last modified: May 25, 2011