Eugene D. Lanier, Inc. - Page 10

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          Corporation and the Laniers, which amount reflected the                     
          difference between the FMV and the selling price/book value of              
          the Property determined by respondent.  Respondent also                     
          determined that petitioners were liable for additions to tax                
          pursuant to section 6661(a) for a substantial understatement of             
          income tax.                                                                 
               Respondent subsequently conceded that neither the                      
          Corporation nor the Laniers are liable for additions to tax                 
          pursuant to section 6661(a) for the taxable year 1987.  Moreover,           
          respondent conceded at trial that the FMV of the Property was               
          $620,000 rather than $640,000 as previously determined.                     
          Respondent further conceded that the Property's selling price was           
          $425,000.  Finally, the parties have agreed that $24,370 of the             
          Corporation's net operating loss for 1989 remains available to be           
          carried back to the Corporation's taxable year 1987 if it is                
          decided that the Corporation failed to report taxable income                
          equal to or greater than that amount for 1987.                              
               We must decide the FMV of the Property.  We must also decide           
          whether the transfer of $13,000 to the Committee by the                     
          Corporation results in the imputation of a constructive dividend            
          to the Laniers.                                                             
          I.  Did the FMV of the Property exceed $425,000?                            
               Section 311(b)(1) provides that if a corporation distributes           
          its property to its shareholder at a time when the FMV of the               

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