-3-
discussion. The stipulation and exhibits are also incorporated
herein by this reference.
Leonard Pipeline Contractors, Ltd., petitioned this Court
contesting respondent’s determination of an $807,983 deficiency in
its Federal income tax for its taxable year ended September 30,
1987, and additions to tax pursuant to section 6653(a)(1)(A) in the
amount of $40,399 and section 6653(a)(1)(B) in the amount of 50
percent of the interest on $807,983. The deficiency was based on
respondent's determination that $1,642,593 of the $1,777,800
petitioner deducted as compensation paid to Richard L. Leonard was
unreasonable. Respondent subsequently conceded the additions to
tax.
At the time petitioner Leonard Pipeline Contractors, Ltd.,
filed its petition herein, its principal place of business was in
Scottsdale, Arizona. Petitioner filed the relevant Federal income
tax return based on a fiscal year ended September 30, 1987. (All
references hereinafter to petitioner's relevant years refer to
petitioner's fiscal years ended September 30.)
Richard L. Leonard had extensive experience in the pipeline
industry, dating from the 1950's. In 1977, he caused petitioner to
be established in Canada and became its president and chief
financial and operating officer. At all relevant times,
petitioner's stock was wholly owned by R.L. Leonard Holdings, Ltd.
(RLLH), whose stock in turn was wholly owned by Mr. Leonard.
Petitioner became a U.S. corporation on April 18, 1985.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
Last modified: May 25, 2011