- 3 - that shareholder's wife; and (2) whether petitioners are liable for substantial understatement penalties under section 6662. Background The parties submitted the instant case fully stipulated pursuant to Rule 122. The facts stipulated by the parties are incorporated herein by reference and are found as facts in the instant case. When they filed their petition, petitioners resided in Monroe, Iowa. During the years in issue, petitioner Larry Van Wyk (petitioner) and his brother-in-law, Keith Roorda, each owned 50 percent of the stock of West View of Monroe, Iowa, Inc. (West View), an S corporation engaged in the business of farming. On December 24, 1991, petitioners borrowed $700,000 from Keith Roorda and his wife, Linda Roorda. To evidence their debt to Keith and Linda Roorda (the Roordas), petitioners executed a promissory note bearing interest at 10.5 percent per annum. The note was unsecured. Also, on December 24, 1991, petitioners transferred $700,000 to West View. Of that amount, $253,583 retired debts petitioners owed to West View with the remaining $444,417 constituting indebtedness owed by West View to petitioners (the loan). On their tax returns for 1988 through 1993, petitioners reported one-half of the profits and losses from West View. Respondent determined that petitioners' income should bePage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: May 25, 2011