Big Hong Ng - Page 35

          Issue 10.  Other Adjustments                                                
               Respondent contends that Strong Hope could not substantiate            
          $41,194 of a claimed net operating loss carryover from 1988.                
          Strong Hope did not contest this determination.  We therefore               
          sustain respondent's determination to the extent the adjustment may         
          affect Strong Hope's 1989 tax year.                                         
               Respondent also claims that Strong Hope should be taxed on             
          rental income of $2,977 that it received from Celadon Restaurant in         
          1988.  We do not have jurisdiction over Strong Hope's 1988 tax              
          year.  Accordingly, we do not sustain this adjustment.                      
          Issue 11.  Strong Hope's Additions to Tax                                   
               Respondent determined an addition to tax under section                 
          6651(a)(1) and a penalty under section 6662 against Strong Hope for         
               Section 6651(a)(1) imposes an addition to tax for failure to           
          timely file a return. Strong Hope did not timely file its 1989              
          corporate tax return; thus, it is liable for the addition to tax            
          under section 6651(a)(1).                                                   
               Pursuant to section 6662, a penalty is imposed on that portion         
          of the underpayment that is attributable to negligence or disregard         
          of rules and regulations or to substantial understatement.  Like            
          Ms. Ng, Strong Hope was uncooperative during the audit, did not             
          provide adequate records, and misrepresented facts to respondent's          

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