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corporation (the section 6038A issues). As resolution of the
section 6038A issues could negate the need for a trial of issues
involving section 482 (section 482 was an alternative ground for
the adjustments), we conducted a separate trial of the section
6038A issues. With this background in mind, the issues for
decision are:
(1) Whether section 6038A applies to petitioner for its tax
year ending April 30, 1991; and, if so,
(2) whether there was a failure to authorize petitioner as
its parent's agent under section 6038A(e)(1); and, if so,
(3) whether respondent's determination under section
6038A(e)(3), reducing petitioner's cost of goods sold by
$1,494,437, was an abuse of discretion;3
(4) whether respondent's determination under section
6038A(e)(3), eliminating petitioner's NOL carryforward of
$165,147, was an abuse of discretion;
(5) whether petitioner may deduct consulting fees of
$280,922;4 and
(6) whether petitioner is liable for the accuracy-related
penalty under section 6662(a) for negligence.
3 References to "abuse of discretion", unless otherwise
indicated, are in the context of a sec. 6038A analysis.
4 Petitioner's entitlement to the consulting fee deduction
is not a sec. 6038A issue. See infra.
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