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contemporaneous time records was Ms. Borsani’s and Mr. G.
Kentris’ testimony that Mr. G. Kentris’ allocations of the owner-
manager’s hours for the upcoming year were recorded and served as
the basis for allocating the BKK fees. Such forecasts, even if
recorded, merely frame the problem, the accuracy of petitioners’
estimates; the recording of estimates does not make them any more
or less accurate.
Petitioners have failed to persuade us that the owner-
managers’ time allocations accurately reflected the hours spent
by them with respect to each purchasing member. A close
examination of petitioners’ "unusual events” argument, along with
a consideration of the allocations to Perrysburg and Wapak,
convinces us that petitioners' allocations were, at best, what
petitioners’ counsel characterized them as during his examination
of Mr. G. Kentris: a “guesstimation based on conversations
between [sic] the [owner-managers]”. Petitioners have failed to
prove that they were not negligent in allocating the BKK fees
according to petitioners' ability to “assume” the cost of such
expenses. Respondent's determination of a section 6662 penalty
is therefore sustained.
Decisions will be entered
for respondent.
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Last modified: May 25, 2011