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liability to CB&T is a nondeductible contingent liability under
section 461(f).30
We sustain respondent’s determination on this issue.
Issue 5. Additions to Tax for Late Filing
Briggs untimely filed his 1986, 1987, and 1988 individual
Federal income tax returns on April 28, 1988, February 7, 1990,
and February 7, 1990, respectively. The Morrises untimely filed
their 1986, 1987, and 1988 individual Federal income tax returns
on May 19, 1988, February 13, 1990, and February 13, 1990,
respectively. Respondent determined that petitioners are liable
for additions to tax pursuant to section 6651(a)(1) for the late
filing of their 1986 and 1987 Federal income tax returns.31
Section 6651(a)(1) imposes an addition to tax if a required
return is not filed on or before its due date, unless it is shown
30 Respondent has not raised, and we do not reach, any issue
as to whether the deductions in issue are subject to the
limitations of sec. 461(h), which provides that certain
deductions cannot accrue until there has been “economic
performance” with respect to the item. We note, however, that
the record does not conclusively establish that Towers
Construction ever reimbursed CB&T for its $460,000 payment to Key
West Polo against the letter of credit, or if it did, exactly
when. Mr. Morris testified that Towers Development (rather than
Towers Construction) repaid the $460,000 out of proceeds of one
of its developments.
31 Although the parties have stipulated that petitioners
filed their 1988 individual Federal income tax returns late,
respondent has not asserted sec. 6651(a)(1) additions to tax with
regard to the 1988 returns.
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