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Respondent determined a deficiency in petitioners' 1993
Federal income tax in the amount of $8,645 and an accuracy-
related penalty under section 6662(a) in the amount of $1,729.
The issues for decision are: (1) Whether petitioners must
report interest income; (2) whether petitioners are entitled to
an ordinary loss deduction of $32,500 under section 1244; and
(3) whether petitioners are liable for an accuracy-related
penalty under section 6662(a).
Petitioners resided in Bayside, New York, at the time their
petition was filed.
Petitioners reported $3,143 as interest income. Petitioners
did not report an additional $752 of interest income on their
1993 return.
In 1993, petitioner Antonino Pecora (petitioner) and others
were about to enter into the restaurant business. Petitioner
hired an attorney to incorporate the restaurant and to negotiate
a lease for restaurant space with the Warwick Hotel.
Petitioner's attorney incorporated the restaurant under the name
of Bis Restaurant, Ltd. (Bis). The Certificate of Incorporation
of Bis was filed with the State of New York Department of State
on August 18, 1993. The Certificate of Incorporation authorized
Bis to issue 200 shares of no par value stock.
On Form 4797, Sales of Business Property, attached to their
1993 return, petitioners reported an ordinary loss on section
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Last modified: May 25, 2011