Clinton N. and Naomi K. Bohannon - Page 5

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                  Bob Wade was the president of Bob Wade Ford at all times                              
            relevant here.  Petitioner originally owned 80 percent of the                               
            stock of Bob Wade Ford.  He became the 100-percent shareholder on                           
            December 31, 1983.                                                                          
                  Bob Wade Ford was a C corporation until the end of 1975.  It                          
            became an S corporation in 1976.  Bob Wade Ford was an accrual                              
            method taxpayer.                                                                            
                  2.    Petitioners' Role in the Management of Bob Wade Ford                            
                  When petitioner traveled to the United States from Panama,                            
            he visited Bob Wade Ford and occasionally attended car auctions                             
            with Bob Wade.  Petitioner did not attend management meetings,                              
            review the books, or do any work at the dealership.  Petitioner                             
            was not knowledgeable about the automobile sales business.  Mrs.                            
            Bohannon never worked at Bob Wade Ford.                                                     
                  3.    Petitioners' Capital Contributions to Bob Wade Ford                             
                  In 1988, petitioner contributed $125,000 to Bob Wade Ford.                            
            His allocable share of its 1988 loss was $254,752.  He                                      
            contributed $275,000 in 1989, and his allocable share of the                                
            corporate loss was $133,709.  Bohannon, S.A. provided $25,000 to                            
            Bob Wade Ford in 1989.                                                                      
                  Petitioners deducted losses from Bob Wade Ford of $214,530                            
            on their 1988 return and $105,767 on their 1989 return.                                     
                  4.    Bob Wade Ford's Tax Returns                                                     
                  No loans from shareholders were reported on Bob Wade Ford's                           
            tax returns (Forms 1120S) for 1979, 1980, 1981, 1982, 1983, 1984,                           




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