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February 1996, totaling 114 hours, Mittelstedt charged petitioner
$34,200.
This case was calendared for trial on May 20, 1996, and was
reported settled at the calendar call. The parties entered into
a closing agreement, signed by petitioner on June 6, 1996. This
agreement provided that the dispute would be resolved by using an
indirect method of determining taxable income because
petitioner's records were "inadequate to determine [the amount
of] unearned discount income from various deferred income
accounts and the [amount of] bad debts from the various bad debt
accounts", and that in subsequent years petitioner would maintain
records sufficient to allow its tax return to be audited on a
"line-by-line" basis "as the appropriate rules and regulations
may require."
On June 19, 1996, the parties filed a stipulation with this
Court providing that petitioner was liable for deficiencies in
income taxes for the taxable years 1991 and 1992 in the amounts
of $383,874 and $124,325, respectively. The stipulation further
provided that petitioner was not liable for the section 6662(a)
penalties for either year. The motion for litigation costs was
subsequently filed.
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