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With respect to Comet Printing, Inc. per the
examination, the adjustment was $127,023.
Respondent concedes a duplication of 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 concedes an adjustment to the accrual
basis of accounting in the amount of $8,660.
Respondent concedes additional legal fees in the
amount of $4,000.
And respondent concedes an equipment loss in the
amount of $7,000.
The fraud penalty will be imposed in full with
respect to petitioner Comet Printing.
With respect to petitioners the estate of Kevin
Lorenz and Elizabeth Lorenz, the initial adjustment for
the 1989 tax year for the notice of deficiency is
$105,019.
Respondent concedes an additional capital
contribution in the amount of $23,000.
Respondent concedes additional cash expenses for
the corporation in the amount of $20,000.
Respondent concedes additional postage for the
corporate expense in the amount of $5,000.
Respondent concedes legal fees, reducing the
constructive dividend, in the amount of $4,000.
The fraud penalty in full will be asserted against
the estate of Kevin J. Lorenz, and a reduced fraud
penalty will be asserted against petitioner Elizabeth
Lorenz at the amount of 20 percent.
Petitioners' counsel then said, "We're in agreement, Your
Honor", and said that petitioners agreed to settle the cases on
that basis. Respondent's counsel and petitioners' counsel then
added:
MS. OSHIRO: Yes. And for the record, the
settlement with respect to the 1990 tax year is as was
read into the record earlier.
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