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issues.2 As a result, the deficiencies now asserted by
respondent have been reduced from those set forth in the notices
of deficiency. After concessions, the issues remaining for
decision are:
1. Whether petitioners improperly elected to use the
installment method of accounting to report income from sales of
real property; and, if the elections were improper, whether
petitioners should use the accrual method as determined by
respondent or the cost recovery method advocated by petitioners;3
2. whether petitioner Chen C. Wang's closely held corpora-
tion, EIC Group, Inc. (EIC), is entitled to deduct as reasonable
compensation commissions of $901,428 and a bonus of $500,000 paid
to Chen C. Wang in 1989 and 1990, respectively;
3. whether expenditures of $550,663 made in 1990 by EIC
for the benefit of the Wangs represent loans to the Wangs or
constructive dividends; and
4. whether petitioners are liable for the accuracy-related
penalties under section 6662(a).
2In connection with the settlements, the parties filed with
the Court the first stipulation of settled issues, followed by
the second, third, fourth, fifth, sixth, and seventh stipulations
of settled issues.
3If we find that petitioners must use the accrual method,
there are several subissues concerning the proper calculation of
income under the accrual method. See infra discussion.
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