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consequently, its income and losses passed through to its
shareholders during each of the years at issue.
Michael Lambaiso (petitioner) owned 200 shares of Classic Pub,
Inc. stock, while Jenro and Evelyn Lambaiso, petitioner's parents,
each owned 400 shares. On November 22, 1991, petitioners purchased
Jenro and Evelyn Lambaiso's 800 shares of Classic Pub, Inc. stock.
Accordingly, the parties have stipulated that the income and losses
from Classic Pub should be allocated to petitioners as 28.98
percent for 1990, 100 percent for 1991, and 100 percent for 1992.
Classic Pub was licensed to serve alcohol by the Virginia
Alcoholic Beverage Control Board (VABCB). It operated 16 hours a
day, from 10 a.m. to 2 a.m., 7 days a week. Classic Pub ran some
form of discounted beverage specials each day of the week. The
greatest number of discounted beverage sales occurred during the
Wednesday and Friday night "happy hours" from 7 p.m. to 9 p.m. It
had a maximum seating capacity of 144 persons.1 Classic Pub
usually had two bartenders tending the bar at any given time and a
"bar back" person in order to relieve the bartenders from
miscellaneous tasks. Sales were rung up on the bar/restaurant's
cash register.
Classic Pub submitted Mixed Beverage Annual Review (MBAR)
reports to VABCB, indicating the dollar amounts of its sales of
1 During the years at issue, the actual number of seats
was for 130 persons.
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Last modified: May 25, 2011