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The corporation did not maintain books and records by which
its shareholders' respective bases in their stock could be
determined, primarily as a result of Michael's failure to keep
such records. Michael, Jody, and David have not proved their
bases in their corporate stock, other than zero, as of the
beginning of their taxable years in issue.
In the statutory notice of deficiency, respondent determined
that Michael contributed $35,800, $68,413.75, and $43,696 with
respect to his stock in the corporation during 1992, 1993, and
1994, respectively, and has since conceded that Michael
contributed an additional $12,964 during 1992. Jody and David
made no contributions with respect to their stock. Petitioners
have not disproved respondent's determinations of their
contributions with respect to their stock. The amounts
determined by respondent will, therefore, be used in the Rule 155
computation.
Michael caused the corporation to regularly issue checks
from its bank account in payment of the family members' personal
expenses. Relying on the corporation's bank statements,
respondent determined that the following amounts were paid to or
on behalf of the corporation's shareholders:
Year Michael Jody David
1992 $83,526.53 --- $25,784.81
1993 98,515.43 $19,224 ---
1994 65,082.10 23,415 ---
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