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Internal Revenue Code in effect for the years in issue, and all
Rule references are to the Tax Court Rules of Practice and
Procedure, unless otherwise indicated. In docket No. 5220-95,
respondent issued a notice of final S corporation administrative
adjustment (FSAA) to Douglas J. Von Allmen, tax matters person of
State Supply Warehouse Co. (State Supply), setting forth the
following adjustments with respect to State Supply's 1989 taxable
year:
Item FSAA Adjustment Amount in Dispute
Sales promotion $7,065 -0-
Covenant not to compete 673,560 $673,560
During the 1990 tax year, State Supply was an S corporation
not subject to the unified audit and litigation procedures of the
Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), Pub. L.
97-248, sec. 402(a), 96 Stat. 324, 648. All of respondent's
adjustments to State Supply flowed directly through to its
shareholders' tax returns. Respondent determined the following
deficiencies in, and penalty on, petitioners' Federal income tax:
Charles B. and Teresa A. Thompson--docket No. 5219-95
Year Deficiency
1990 $8,638
Douglas J. and Linda L. Von Allmen--docket No. 16787-95
Accuracy-related Penalty
Year Deficiency Sec. 6662(a)
1990 $88,319 $17,664
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