Wallace R. Noel and Robinette Noel - Page 2

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                    Held, further:  P failed to substantiate a part of his            
               basis in Company Y.                                                    
                    Held, further:  R's calculation of the interest portion           
               on the loan from Bank X is sustained.                                  
                    Held, further:  P failed to substantiate $19,975 of               
               attorney's fees.                                                       
                    Held, further:  P is not liable for the accuracy-                 
               related penalty under sec. 6662(a).                                    


               David M. Berrett, for petitioners.                                     
               William R. Davis, Jr., for respondent.                                 


                       MEMORANDUM FINDINGS OF FACT AND OPINION                        
               FAY, Judge:  Respondent determined deficiencies in peti-               
          tioners' Federal income taxes and penalties as follows:                     
                                                             Penalty                  
                   Year              Deficiency             Sec. 66631                
                   1990               $815,589              $611,692                  
                   1991                  1,069                   802                  
                   1 Prior to trial, respondent conceded that                         
                   no amounts were due to fraud.  In her answer to                    
                   the petition, respondent asserted an accuracy-                     
                   related penalty against petitioners pursuant to                    
                   sec. 6662(a).                                                      
               All section references are to the Internal Revenue Code in             
          effect for the taxable years in issue, and all Rule references              
          are to the Tax Court Rules of Practice and Procedure, unless                
          otherwise indicated.                                                        
               A trial was held to resolve the following issues for                   
          decision:                                                                   






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