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cash outlay, and there was no direct obligation between
P and S. Held, further, P’s are liable for the
addition to tax for filing untimely their returns.
Edward J. Hannon and Arthur M. Holtzman (specially
recognized), for petitioners.
William T. Derick, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
LARO, Judge: Respondent determined the following
deficiencies in petitioners’ 1989 through 1991 Federal income tax
and additions thereto:
Additions to Tax
Year Deficiency Sec. 6651(a)(1)
1989 $115,471 $11,547
1990 176,382 8,819
1991 11,570 -
After concessions, we decide the following issues:
1. Whether petitioner’s basis in his S corporation stock
under section 1366(d) includes his participation interest in a
loan between a bank and his S corporation. We hold it does not.
2. Whether petitioners are liable for the additions to tax
determined by respondent. We hold they are.
Rule references are to the Tax Court Rules of Practice and
Procedure, and section references are to the Internal Revenue
Code as applicable to the years in issue. Singular references to
petitioner are to Thomas F. Grojean.
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