Gideon L. and Corazon P. Medina - Page 11

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          however, do not necessarily establish the fair market rate.  See            
          Estate of Arbury v. Commissioner, 93 T.C. 136, 143 (1989)                   
          (stating that the maximum rates set by usury laws do not                    
          necessarily reflect the economic value of the use of borrowed               
          funds).  Therefore, we need not decide whether ERISA preempts               
          Michigan's usury laws.  Respondent determined that the fair                 
          market interest rate is 10.5 percent and petitioners have not               
          established that this rate is erroneous.  See Welch v. Helvering,           
          290 U.S. 111, 115 (1933).  Accordingly, we hold that, in                    
          determining the "amount involved" relating to petitioners' loan,            
          10.5 percent is the fair market interest rate.                              
          V.   Addition to Tax                                                        
               Each disqualified person liable for section 4975 excise                
          taxes with respect to a prohibited transaction is required to               
          file Form 5330 for each taxable year, or portion thereof, in the            
          taxable period.  Sec. 6011; sec. 54.6011-1(b), Pension Excise Tax           
          Regs.  Section 6651(a)(1) imposes an addition to tax for the                
          failure to file a required return, unless petitioners establish             
          that such failure is due to reasonable cause and not due to                 
          willful neglect.  Petitioners failed to file excise tax returns             
          for the years in issue and have failed to establish that they had           
          reasonable cause not to file such returns.  Accordingly,                    
          petitioners are liable for the section 6651(a)(1) additions to              
          tax.                                                                        
                                                  Decision will be entered            
                                             for respondent.                          


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