- 6 -
These amounts differ slightly from the amounts determined in
the statutory notices of deficiency. The amounts listed as paid
by the corporation to or on behalf of Michael include amounts
paid by it to or on behalf of Bonnie, James, and Adam and to or
on behalf of Jody and David for the taxable years during which
Jody and David were not shareholders. We have considered and
reject petitioners' arguments that portions of these amounts
constitute loans from the corporation to the shareholders and/or
family members. No loan documents or other records showing the
existence or amounts of the alleged loans were presented at
trial, and the corporation's Forms 1120S for 1992, 1993, and 1994
do not show any loans on the Schedules L (balance sheets).
Accordingly, the amounts listed above shall be used in the Rule
155 computation.
Michael ceased to operate in the corporate form and resumed
designing and building homes as a sole proprietor shortly after
respondent's examination of petitioners' and the corporation's
tax returns for 1992, 1993, and 1994.
The first issue for decision is whether any portions of the
amounts paid to or on behalf of Michael and Jody constitute
employee wages. Respondent's determinations in the statutory
notices of deficiency are presumed to be correct, and petitioners
bear the burden of proving otherwise. Rule 142(a); Welch v.
Helvering, 290 U.S. 111, 115 (1933).
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: May 25, 2011