- 2 -
Additions to Tax and Penalties
Sec. Sec. Sec.
Year Deficiency 6653(a)(1)(A) 6653(a)(1)(B)* 6662(a)**
1987 $2,279 $114 50% of the -–
interest due
on $2,279
1988 2,912 146 -– -–
1989 7,100 -– -– $1,165
* Sec. 6653(a)(1)(B) was repealed for 1988.
** Sec. 6662(a) was enacted in 1989, generally
effective for returns the due date for which is after
Dec. 31, 1989.
The issues for decision are:
1. Whether Oak Hill Co. (Oak Hill), a putative business
trust established by petitioners, should be disregarded for
Federal income tax purposes because it lacks economic substance.
We hold that it should.
2. Whether petitioners are liable for additions to tax for
negligence pursuant to section 6653(a) for taxable years 1987 and
1988 and an accuracy-related penalty pursuant to section 6662(a)
for taxable year 1989.1 We hold that they are.
FINDINGS OF FACT
The parties have stipulated some of the facts, which are so
found. The stipulated facts and associated exhibits are
1 All section references are to the Internal Revenue Code in
effect for the years in issue. All Rule references are to the
Tax Court Rules of Practice and Procedure.
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