- 3 - for additions to tax pursuant to section 6661(a) for a substantial understatement of tax for 1987 and 1988. (Petitioners concede the correctness of the section 6662(a) accuracy-related penalty for 1989.) This case was submitted pursuant to Rule 122, on a full stipulation of facts, and the facts as stipulated are so found. This reference incorporates herein the stipulation of facts and attached exhibits. Petitioners resided in Jacksonville, Florida, at the time they filed their petition in this case. (The term petitioner will be used henceforth to refer to Raymond K. Mason.) Background Petitioners are the only shareholders of Rebuilding Service, Inc. (RSI), a corporation which makes investments and loans, in addition to providing consulting services. Petitioner is RSI's president and director. Petitioners report their income on a calendar year and cash basis. RSI is also on a calendar year; RSI reports its income on an accrual basis. As of the time this case was submitted, a revolving credit relationship between petitioners and RSI, in which petitioners periodically borrowed from and repaid advances made by RSI, had existed for a number of years. During 1987 and 1988, RSI advanced funds to petitioners in the amounts of $1,128,570 and $25,648, respectively, for both personal and investment purposes. The terms of the loans were not reduced to a note or securityPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
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