Larry W. and Cynthia J/ Van Wyk - Page 2

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               such an interest.  Sec. 465(b)(3)(B)(ii), I.R.C.,                      
               dealing with amounts borrowed by a corporation from its                
               shareholders, does not apply to except P from sec.                     
               465(b)(3)(A), I.R.C.                                                   
                    2.  Held, further, P is not liable for penalties                  
               under sec. 6662, I.R.C.                                                

               Burns Mossman, Steven J. Roy, and Angela L. Watson, for                
               Deanna R. Kibler and Albert B. Kerkhove, for respondent.               


               WELLS, Judge:  Respondent determined deficiencies in                   
          petitioners' income taxes of $60,371, $14,884, $6,875, and                  
          $20,173 for their 1988, 1991, 1992, and 1993 taxable years                  
          respectively, and additions to tax pursuant to section 66621 of             
          $2,977, $1,375, and $4,035 for their 1991, 1992, and 1993 taxable           
          years respectively.                                                         
               In the instant case, after concessions, we must decide the             
          following issues:  (1) Whether petitioner Larry Van Wyk is at               
          risk with respect to a loan he made to an S corporation in which            
          he owns 50 percent of the stock, where the source of the funds              
          constituting the loan is the other 50-percent shareholder and               

          1    Unless otherwise noted, all section and Code references are            
          to the Internal Revenue Code in effect for the years in issue,              
          and all Rule references are to the Tax Court Rules of Practice              
          and Procedure.                                                              

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