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with a $45,000 reduction to that amount for the accrual of
Goshorn's rent to petitioner. For Goshorn's tax year ending
October 31, 1989, Goshorn reported unappropriated retained
earnings of $867,324.
During all of the tax years at issue, petitioner and Goshorn
each held 50 percent of the shares of stock in Racon Construction
Co. (Racon), a C corporation engaged in construction. The com-
bining balance sheet of Goshorn and Racon for their tax years
ended October 31, 1990, reflects as an asset $392,617 as the
amount due from stockholder. The detailed balance sheets of
Goshorn state that, as of September 30, 1991, there was
$379,898.05 due from the stockholder.
Late Filing Penalty
Petitioner requested an automatic extension for filing a
1987 Federal income tax return until August 15, 1988, and a
further extension for filing until October 15, 1988. Petitioner
and his wife filed their joint 1987 Federal income tax return on
August 16, 1990.
Petitioner applied for and received an extension of time to
file a 1988 Federal income tax return until October 16, 1989.
Petitioner and his wife filed their joint 1988 Federal income tax
return on October 11, 1990. Petitioner and his wife filed their
joint 1990 Federal income tax return on October 6, 1992.
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