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all Rule references are to the Tax Court Rules of Practice and
Procedure.
The issues to be decided are as follows:
1. Whether petitioners are entitled to deduct a loss
carryforward attributable to the deduction by petitioner P. David
Musgrave's wholly owned S Corporation on its 1988 tax return of
an amount it paid during 1988 to settle a lawsuit;
2. whether the S Corporation is entitled to a deduction it
claimed on its 1990 return for attorney's fees paid during 1990;
and
3. whether petitioners are liable for an addition to tax
and penalty pursuant to sections 6651 and 6662 for taxable year
1990.
FINDINGS OF FACT
Some of the facts have been stipulated for trial pursuant to
Rule 91. The parties' stipulations of fact are incorporated
herein by reference and are found as facts in the instant case.
At the time they filed their petition in the instant case,
P. David Musgrave and Barbara J. Musgrave (petitioners) resided
in Kettering, Ohio.
Petitioner P. David Musgrave (petitioner) was, at all
relevant times, the sole shareholder of an S Corporation known
variably, in chronological order, as David Musgrave, CPA, Inc.;
Jeffcott & Musgrave CPAs, Inc.; and Musgrave & Associates CPAs,
Inc. (S Corporation).
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