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called for trial. They told the Court that they had reached a
basis of settlement. Respondent's counsel stated the following
basis of settlement for the record:
MS. OSHIRO: Your Honor, the parties are pleased
to announce a basis for settlement has been reached in
this case. There's some question as to whether we have
the correct starting number. There's an adjustment
that respondent believes was conceded before the notice
of deficiency was sent, and we will need to clarify
that. But otherwise, it's -- respondent is willing to
make the concession; it's a question of whether it was
made before the notice went out.
The basis for settlement, with question as to
whether this is the proper starting number for Comet
Printing in 1989, starting number is $127,023.
Respondent concedes there was a duplication of an
income item in the amount of $2,300.
Respondent concedes additional cash expenses in
the amount of $20,000.
Respondent concedes additional cash postage in the
amount of $5,000.
Respondent also concedes a technical adjustment to
take the petitioners from cash basis to accrual basis
in 1989. The adjustment is $8,660.
For the tax year 1990 -- oh, a fraud penalty will
be asserted in full for the 1989 tax year.
With respect to petitioner Comet Printing in 1990,
the original amount for the notice of deficiency was
$211,699.
Respondent concedes additional cash expenses in
the amount of $15,100, and additional cash postage in
the amount of $5,000.
The civil fraud penalty will be asserted in full
with respect to Comet Printing for the year 1990.
With respect to petitioners Kevin -- estate of
Kevin Lorenz and Elizabeth Lorenz, the starting number
per the notice of deficiency for 1989 was $105,019.
Respondent concedes additional capital
contributions in the amount of $23,000, additional cash
expenses for the corporation -- it's a flow-through
adjustment -- of $20,000, and the additional postage
for the corporate expenses of $5,000.
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