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Petitioners filed joint Federal income tax returns for the years
at issue.
Petitioners formed Robert Ruckman, Inc. (Ruckman, Inc.), as
a West Virginia corporation in 1980 and were each 50-percent
shareholders during the years at issue. Mr. Ruckman served as
president and Mrs. Ruckman as secretary and treasurer. During
the years in issue, Ruckman, Inc., operated a trucking business
with a fleet of four to five trucks used for hauling freight for
customers. Ruckman, Inc., maintained an office in a spare room
in petitioners' residence. Ruckman, Inc., filed Federal income
tax returns on Forms 1120S as an S corporation for the years in
issue.
Mrs. Ruckman performed the "office work" for Ruckman, Inc.,
including keeping the books and records and other administrative
duties, such as securing appropriate permits for truck hauling.
Although Mr. Ruckman had initially driven trucks for Ruckman,
Inc., he ceased doing so after a heart attack in 1986 and
thereafter performed maintenance work for the company and various
other duties, as discussed below.
During the years at issue, Ruckman, Inc., provided hauling
services to Bennett Logging, Inc. (Bennett Logging), a logging
and trucking business run by Gordon Bennett. Since Mr. Bennett
also drove a truck for Bennett Logging and did not maintain an
office, he was unable to devote sufficient attention to the
dispatching duties entailed in running a trucking business, in
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