Robert A. Stanford and Susan Stanford - Page 22

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          1990 joint Federal income tax return and February 28, 1992, the             
          day respondent received the return.                                         
               We note that even though Hurricane Hugo occurred in                    
          September of 1989, on October 25, 1990, petitioners were able to            
          file their 1989 joint Federal income tax return and, in the fall            
          of 1991, petitioner was able to file the 1990 Federal corporate             
          income tax returns of Guardian Bank, Guardian Services, and                 
          Stanford Financial.  Consequently, it appears that the records              
          arguably destroyed by Hurricane Hugo had been reconstructed by              
          the fall of 1991.  Petitioners, however, failed to file their               
          1990 joint Federal income tax return until February 28, 1992,               
          more than 5 months after records that petitioners needed to                 
          complete their 1990 joint Federal income tax return apparently              
          had become available.  Petitioners’ argument based on the                   
          destruction of records, therefore, does not provide reasonable              
          cause for the untimely filing of their 1990 joint Federal income            
          tax return.                                                                 
               With respect to the accuracy-related penalty, respondent               
          argues that no substantial authority existed for petitioners to             
          use deficits in earnings and profits of Guardian Services and               
          Stanford Financial to reduce the subpart F income of Guardian               
               If the Court concludes that petitioners' interpretation of             
          the chain deficit rule and petitioners' application of that rule            

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