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on the transaction, petitioner Dawes received a constructive
dividend from Ameritech when it distributed assets to Mr.
Praegitzer. After concessions,3 the issues for decision are
whether petitioner Praegitzer has unreported dividend income4
and, alternatively, whether petitioner Dawes has unreported
income from a constructive dividend.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulation of facts, supplemental stipulation of facts, and
attached exhibits are incorporated herein by this reference.
Petitioners Praegitzer resided in Palo Cedro, California, and
petitioner Dawes resided in Shasta County, California, at the
time they filed their respective petitions.
In 1976, Kerry Dawes, the brother of petitioner Dawes, and
petitioner Praegitzer began an aircraft propeller repair and
maintenance business (propeller business) as a partnership in
Redding, California. Kathleen Dawes began working in the
propeller business within 1 year of its inception.
3 Respondent conceded that neither petitioner is liable for
the accuracy-related penalty pursuant to sec. 6662(a).
Respondent asserts the deficiencies against petitioners in the
alternative. If we sustain respondent's determination as to
petitioners Praegitzer, the issue as to petitioner Dawes would be
moot.
4 There is no suggestion by any of the parties that
petitioner Praegitzer did not have a dividend because 303
Products' earnings and profits were inadequate.
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