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and an accuracy-related penalty of $28,170 under section 6662(a)
for taxable year ended July 31, 1990.
The issues for decision are: (1) The amount that petitioner
is entitled to deduct as reasonable compensation to Kathryn
Kleindienst; (2) whether petitioner is liable for an addition to
tax for 1989; and (3) whether petitioner is liable for an
accuracy-related penalty for 1990.
FINDINGS OF FACT2
The Escrow Connection, Inc. (petitioner), is an independent
escrow firm, organized in California, with its principal place of
business in Palm Springs, California. Kathryn Kleindienst
(Kleindienst) formed petitioner in 1983 and began business during
1984. Since incorporation, Kleindienst has been petitioner's
sole shareholder and sole officer.
Kleindienst obtained an associate of arts degree in business
administration from The College of The Desert. She acquired the
skills necessary to be an escrow officer by working as a
secretary to an escrow officer for a few years. An escrow
officer must be good with numbers and attending to details.
After working as an escrow secretary, Kleindienst was
promoted to an escrow officer in 1977, and 2 years later, First
1(...continued)
effect for taxable years in issue, and all Rule references are to
the Tax Court Rules of Practice and Procedure.
2 The parties' stipulation of facts, along with attached
exhibits, is incorporated by this reference.
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