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liable for a penalty as follows:
Patrick C. Badell and Lillian A. Badell
Accuracy-related
penalty
Year Deficiency sec. 6662(a)
1994 $10,253 $2,050.60
1995 66,815 13,363.00
1996 87,210 17,442.00
Ronald L. Wilson and Donna M. Wilson
Accuracy-related
penalty
Year Deficiency sec. 6662(a)
1994 $9,550 $1,910.00
1995 59,181 11,836.20
1996 87,650 17,530.00
Petitioners Patrick Badell (Badell) and Ronald Wilson
(Wilson) are the sole shareholders of Badell and Wilson, P.C.
(B&W), an S corporation. B&W performed legal services for W.R.
Kelso Co., Inc. (Kelso), and Kelso constructed a roof on the
Badells’ residence in B&W’s fiscal year 1995.2 Kelso reported
$49,000 of income on its 1994 return based on the legal services
it received in lieu of payment of $49,000 it billed to B&W for
the roof construction. Kelso credited its accounts payable to
B&W in the same amount. B&W did not try to collect from Kelso
for the legal services B&W had performed in B&W’s 1995 fiscal
year or report as income the roofing services it received. After
concessions, the issues for decision are:
1. Whether B&W received barter income of $49,000 from
2 Badell & Wilson’s (B&W) fiscal year ended June 30.
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Last modified: May 25, 2011