Donald C. Richardson and Rita M. Allaire - Page 3

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          and (3) petitioners' personal expenses charged to American                  
          Express and paid by PCCL in the amount of $24,094.                          
               Respondent also determined a deficiency against PCCL.  The             
          adjustments to PCCL were (1) unreported corporate income in the             
          amount of $14,443; (2) disallowed "Other Deductions" in the                 
          amount of $263,956; (3) a disallowed interest deduction in the              
          amount of $37,777; and (4) an upward adjustment to "Cost of Goods           
          Sold" in the amount of $13,770 due to an error on the return.               
               Petitions were timely filed with this Court by petitioners             
          and PCCL on June 11, 1997.  At that time, petitioners were                  
          residents of Kenner, Louisiana.  PCCL, a Louisiana corporation,             
          had its principal office at Metairie, Louisiana.                            
               In the timely filed answer in each case respondent included            
          specific allegations in support of the determination that                   
          petitioners and PCCL were liable for a penalty due to fraud.                
          Respondent alternatively alleged in the answer in each case that            
          petitioners and PCCL, respectively, were liable for an accuracy-            
          related penalty for 1993.  Additionally, on August 8, 1997, the             
          cases were sent to the Appeals Division of the Internal Revenue             
          Service in New Orleans, Louisiana, for consideration.                       
               The cases were calendared for trial at a trial session                 
          commencing March 9, 1998, in New Orleans, Louisiana.  Prior to              
          trial, and after several meetings between the Appeals Office and            
          petitioners, the cases were settled.  Stipulations of settlement            
          were filed for each docketed case.  The stipulations reflected              

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