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claimed in each of the years at issue for this expense was a
dividend paid to Lauzon, Jr.
On July 29, 1998, petitioner filed a petition with this
Court. On September 28, 1998, respondent's answer was filed.
On September 25, 1998, respondent sent the case to Appeals
for consideration. On June 10, 1999, an Appeals officer
contacted petitioner's attorney, William F. Patten (Mr. Patten),
and the parties scheduled a conference for July 2. The Appeals
officer requested that Mr. Patten bring copies of any Forms 1099
that petitioner had issued, a worksheet reconciling the Forms
1099 to the corporate records, and a list of all persons that
received less than $600 from petitioner. Mr. Patten brought the
Forms 1099 to the conference, and he stated that the worksheet
and other information would be provided on July 7. Preparation
of the worksheets took longer than expected, and petitioner was
not able to provide them by the promised date.
On August 16, 1999, the Appeals officer received the
worksheet and other requested information for both years in
issue, except for any information about the $104,000 payments to
Lauzon, Jr. After reviewing the worksheets and other
information, the Appeals officer concluded that all the claimed
deductions were allowable as ordinary and necessary business
expenses, except for the $104,000 payments to Lauzon, Jr.
Petitioner claimed, and respondent allowed, deductions of
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