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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
1989.
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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