Kaps Warehouse, Inc. - Page 2

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                 Following concessions by petitioner, the issues remaining for                        
            decision are: (1) Whether respondent properly reallocated to                              
            petitioner $176,548 for its fiscal year ended March 31, 1991, and                         
            $155,000 for its fiscal year ended March 31, 1992, from three of                          
            its related entities pursuant to section 482; and (2) whether                             
            petitioner is liable for the accuracy-related penalties pursuant to                       
            section 6662(b)(2) for both of the aforementioned fiscal years.                           
                 All section references are to the Internal Revenue Code in                           
            effect for the years at 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 found                                 
            accordingly.  The stipulation of facts and the attached exhibits                          
            are incorporated herein by this reference.                                                
            Kaps Warehouse, Inc.                                                                      
                 Kaps Warehouse, Inc., an Idaho corporation, had its principal                        
            place of business in Blackfoot, Idaho, at the time it filed its                           
            petition.  Petitioner reports its income on the basis of a fiscal                         
            year ending March 31. It timely filed its corporate income tax                            
            returns for its fiscal years ended March 31, 1991 (fiscal year                            
            1991), and March 31, 1992 (fiscal year 1992).                                             
                 Petitioner is a wholesaler of automotive parts and supplies.                         
            It was originally founded by O. Reed Kirkham (presently retired) in                       

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