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FOLEY, Judge: Respondent determined the following
deficiencies, addition to tax, and accuracy-related penalties
relating to petitioners' Federal income taxes:
William L. McCurley and Victoria J. McCurley, docket No. 10499-94
Addition to Tax
Year Deficiency Sec. 6661
1988 $43,612 $10,903
1989 9,900 --
1990 5,600 --
Robert D. Hall and Gayle E. Hall, docket No. 10500-94
Penalty
Year Deficiency Sec. 6662
1989 $11,247 $2,249
1990 11,200 2,240
1991 18,468 3,694
William L. McCurley and Victoria J. McCurley, docket No. 6557-95
Penalty
Year Deficiency Sec. 6662
1991 $12,664 $2,533
1992 4,473 895
Unless otherwise indicated, all section references are to the
Internal Revenue Code in effect for the years in issue.
The issues for decision are as follows:
1. Whether certain payments made by a corporation to
petitioners are loans or constructive dividends. We hold that
they are constructive dividends.
2. Whether petitioners, pursuant to section 6662(a), are
liable for accuracy-related penalties for negligence in the
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