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The Court agrees with and adopts the opinion of the Special Trial
Judge, which is set forth below.
OPINION OF THE SPECIAL TRIAL JUDGE
NAMEROFF, Special Trial Judge: Respondent determined
deficiencies in petitioners’ Federal income taxes, additions to
tax, and penalties as follows:
Addition to Tax Penalty
Year Deficiency Sec. 6651(a)(1) Sec. 6662(a)
1989 $1,363,638 $340,560 $272,728
1990 303,274 -- 60,655
1991 237,234 60,864 47,447
Some of the issues in this case were severed for separate
resolution and resolved in Ahadpour v. Commissioner, T.C. Memo.
1999-9.
The issues for decision herein are: (1) Whether petitioners
are entitled to a claimed business bad debt deduction; (2)
whether petitioners are entitled to deduct legal expenses of
$30,000 in 1990 and $30,025 in 1991; (3) whether petitioners are
liable for the accuracy-related penalty for all years at issue;
and (4) whether petitioners are liable for additions to tax under
section 6651(a)(1) for 1989 and 1991.
Some of the facts have been stipulated, and they are so
found. The stipulations of facts and the attached exhibits are
incorporated herein by this reference. At the time they filed
their petition, petitioners resided in Huntington Beach,
California.
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