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Penalty
Year Deficiency Sec. 6662(a)
1990 $130,182 $26,036
1991 544,877 108,975
1992 413,649 82,730
Unless otherwise indicated, all section references are to the
Internal Revenue Code in effect for the years in issue, and all
Rule references are to the Tax Court Rules of Practice and
Procedure.
The issues we must decide are as follows:
1. Whether petitioner, pursuant to section 162, is entitled
to deduct certain compensation payments to shareholders in
amounts in excess of the amounts determined by respondent. We
hold that petitioner is not so entitled.
2. Whether petitioner, pursuant to section 6662(a), is
liable for accuracy-related penalties for negligence. We hold
that petitioner is liable.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
O.S.C. & Associates, Inc. d.b.a. Olympic Screen Crafts was
incorporated under California law in 1982. During the years in
issue, petitioner's principal place of business was in Fremont,
California. Allen Blazick is petitioner's chief executive
officer, Janette Blazick (Allen Blazick's wife) is petitioner's
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