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1991 $2,272
1993 3,750
John Poulos, docket No. 23959-96
Year Deficiency
1991 $18,842
1992 803
All section references are to the Internal Revenue Code in effect
for the years in issue, and all Rule references are to the Tax
Court Rules of Practice and Procedure. The issue for decision is
whether petitioners are entitled to deduct amounts paid for legal
fees. We hold that Liberty Vending, Inc., may not and that John
Poulos may to the extent provided below.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found. At
the time petitioners filed their petitions, Liberty Vending's
principal place of business and John Poulos' residence were in
Palatine, Illinois.
John Poulos was the sole shareholder and operator of Galaxy,
Inc. (Galaxy), a subchapter S corporation, and Liberty Vending,
Inc. (Liberty), a subchapter C corporation. Galaxy and Liberty
operated video game arcades and, on a weekly basis, collected
receipts from the video games, remitted a portion of such
receipts to the games' manufacturers, and notified the
manufacturers how often each game was used. Galaxy had four
employees, and Liberty had two employees.
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