- 2 -
tax under section 6654 in the amount of $217 and an accuracy-
related penalty under section 6662(b)(1) in the amount of $130.
After concessions by both parties,2 the issues for decision
are: (1) Whether certain corporate distributions to William
Katsaros constitute loans, or compensation for services; and (2)
whether petitioners are liable for an accuracy-related penalty
under section 6662.
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated herein by reference. At the time the petition was
filed, petitioners resided in Santa Rosa, California.
Petitioners are husband and wife. References to petitioner are
to William Katsaros.
Background
In 1991, petitioner and his father acquired an escrow
company in Hawaii called Hawaii Island Escrow, Inc. (HIEI).
Petitioner's father contributed most of the capital for the
acquisition of HIEI and took 90 percent of the stock in the
corporation. Petitioner received 10 percent of the stock of HIEI
and was named president of the corporation. Although petitioner
2Petitioners concede they had additional rental income in
the amount of $2,363 and income from a cosmetology business in
the amount of $1,033 and owe self-employment tax on the
cosmetology income. Respondent concedes petitioners are not
liable for the estimated tax penalty in the amount of $217, and
that petitioners are not liable for the $2,119 in FICA tax
determined in the notice of deficiency.
Page: Previous 1 2 3 4 5 6 7 Next
Last modified: May 25, 2011