Shigenori Kudo and Motomi Kudo, et al. - Page 7

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               (6)  Whether the Takaos are liable for an addition to tax              
          for substantial underpayment of tax under section 6661 for 1988.            
          We hold that they are.                                                      

                       Toraya Corporation(docket No. 19181-94)   After                
          concessions,4 the following issues remain in dispute: (1)                   

               4  In a stipulation of settled issues filed Dec. 4, 1995,              
          and an amended stipulation of settled issues filed May 14, 1996,            
          the parties agreed as follows:                                              
               1.  Respondent concedes that adjustments for "Purchase                 
          Expense" should be decreased as follows:                                    
                    1988      $30,733                                                 
                    1989      5,114                                                   
                    1990      25,230                                                  
                    1991      24,000                                                  
          Respondent also concedes that Toraya is entitled to an additional           
          $6,000 purchase expense in 1990.                                            
               2.  Respondent concedes adjustments for "Amortization                  
          Expense" for all years in issue.                                            
               3.  Respondent and Toraya agree that adjustments for                   
          "Business Travel" are settled by reducing the amounts shown as              
          follows:                                                                    
                    1988      $8,931                                                  
                    1990      4,400                                                   
                    1991      3,606                                                   
               4.  Respondent and Toraya agree that adjustments for "Truck            
          Expense" for all years in issue are settled by reducing the                 
          amounts as follows:                                                         
                    1988      $13,000                                                 
                    1989      4,123                                                   
                    1990      3,936                                                   
                    1991      2,009                                                   
               5.  Toraya concedes that the adjustment for "Employee                  
          Meeting Expense" for 1988 in the amount of $6,455 is correct.               
               6.  Respondent concedes that the adjustment for "Office                
          Expenses" for 1988 should be reduced by $1,800.  The remaining              
          amounts for the years in issue under this adjustment remain in              
          dispute.                                                                    
               7.  Respondent concedes adjustments entitled "Restaurant               
          Expenses" for 1988 and 1989.                                                
               8.  Respondent concedes the adjustment for "Rent Expenses"             
          for 1988.                                                                   
               9.  Respondent concedes adjustments entitled "Depreciation             
          Expenses -- Auto" and "Depreciation Expenses -- Other" for all              
                                                             (continued...)           


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