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of $4,000 is the pretax value. After the income tax is deducted,
the $4,000 would be reduced and would come closer to matching the
distributions received by petitioner and treated as tax-free loan
proceeds. Furthermore, the minutes are not dated and are not
signed by petitioner, who claims he prepared the minutes after
the meeting. Rather, the minutes allegedly contain the signature
of his father (who did not appear at trial), who bears the same
name as petitioner. Thus, even if we were to admit the document,
we would give it little weight. Accordingly, we find that the
$27,700 in distributions is includable in petitioners' income
under section 61(a)(1) as compensation for services.
We also find that petitioners are liable for the accuracy-
related penalty under section 6662(b)(1) as stated in the notice
of deficiency. Petitioners did not produce any evidence
regarding the penalty, and the record does not indicate that the
penalty has been conceded by respondent.
To reflect the foregoing,
Decision will be entered
under Rule 155.
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Last modified: May 25, 2011