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and sole shareholder.1 Resolution of this issue turns on the
factual question of whether petitioner issued a promissory note
in payment of the bonus during the taxable year. Unless
otherwise indicated, section references are to the Internal
Revenue Code in effect for the taxable year in issue; all Rule
references are to the Tax Court Rules of Practice and Procedure.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulations of fact and attached exhibits are incorporated
by this reference. Petitioner is a construction company
incorporated in 1987 under the laws of the State of New York. At
the time the petition was filed, petitioner maintained its
principal place of business in Ballston Spa, New York. Frank
Petar (Mr. Petar) has been petitioner’s sole shareholder,
president, and one of two members of the board of directors since
the company’s incorporation. His wife, Franka Petar
(Mrs. Petar), is the other member of the board of directors and
the corporate secretary. Thomas Cunniff (Mr. Cunniff) has at all
times served as petitioner’s accountant and tax return preparer.
For all relevant years, petitioner computed its income for book
1 The $38,164 deficiency for FYE 5/31/90 is entirely
attributable to the disallowance of the bonus deduction.
Respondent has allowed the deduction for the following taxable
year, as a result of which the deficiency is partly offset by an
overpayment for that year and, by reason of the carryback of a
net operating loss, by overpayments in 2 earlier years.
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