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Accuracy-Related Penalties
Year Deficiency Sec. 6662
1989 $210,819 $42,164
1990 125,150 25,030
1991 90,018 18,004
All section references are to the Internal Revenue Code in
effect for the years in issue, and all Rule references are to the
Tax Court Rules of Practice and Procedure, unless otherwise
indicated. All dollar amounts are rounded to the nearest dollar,
unless otherwise indicated.
After concessions,1 the issues for decision are: (1) Whether
petitioner received taxable distributions from Carl E. Jones
Development, Inc. (Development), of $307,976, $261,591, and
$224,827, in 1989, 1990, and 1991, respectively. We hold
petitioner received distributions from Development the character
and amounts of which are set out below. (2) Whether petitioner
had sufficient basis in Development's indebtedness to him to
deduct pass-through losses of $163,487 and $21,022 in 1990 and
1991, respectively. We hold he did not. (3) Whether petitioners
had constructive dividend income of $80,051 in 1989 from either
INI, Inc. (INI), or Spalding Partners, Ltd. (Spalding). We hold
they did not. (4) Whether petitioner received constructive
1
Petitioners reported $66,299 of taxable interest income on
their return for 1989. Prior to trial, petitioners conceded that
the correct amount is $80,120. Petitioner reduced his
shareholder loan account balance with Carl E. Jones Development,
Inc., for a payment of $54,369 that he made in 1990; respondent
concedes on brief the allowance of this payment.
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