Reliable Credit Association, Inc. - Page 4

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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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