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litigation and administrative costs under section 74301 and Rules
230, 231, and 232. These related cases have been consolidated
for the purpose of considering these motions.
On March 13, 1997, respondent issued statutory notices of
deficiency to petitioner Paige Communications Corporation of
Louisiana (PCCL) and to petitioners Donald C. Richardson and Rita
M. Allaire2, husband and wife, for the taxable year ended 1993.
Deficiencies in income tax and penalties were determined as
follows:
Penalties
Taxpayer Deficiency Sec. 6663(a) Sec. 6662(a)1
Richardson/Allaire $12,781 $9,586 -0-
PCCL 104,002 78,002 -0-
1 The negligence penalty was imposed as an alternative to
the fraud penalty.
Respondent determined that petitioners received income in
the form of constructive dividends from PCCL in the amount of
$47,086. Respondent determined that the constructive dividends
consisted of (1) PCCL corporate income in the amount of $14,443
diverted for petitioners' personal use; (2) improvements to
petitioners' residence paid for by PCCL in the amount of $8,549;
1 Unless otherwise indicated, section references are to
the Internal Revenue Code as amended, and all Rule references are
to the Tax Court Rules of Practice and Procedure.
2 "Petitioners" will collectively refer to petitioners
Richardson and Allaire. "Petitioner" will refer to petitioner
Donald C. Richardson individually.
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