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petitioners are liable for the accuracy-related penalties for
1993 and 1994.
Some of the facts have been stipulated and are so found.
Petitioners resided in Marietta, Georgia, at the time they filed
their petitions. For clarity, we have combined our findings of
fact and opinion.
Petitioner Frank J. Feraco (Frank) and his son, Thomas,
organized Southern Auto Brokers, Inc. (Southern Auto), a used car
dealership, in 1992, as a result of Frank’s desire to help his
son earn some money and have a business. Southern Auto was
organized as an S corporation. The Articles of Incorporation
authorized Southern Auto to issue 100,000 shares of common stock.
Ten shares were issued to Frank and Ann M. Feraco on June 1,
1992. (Consistent with the presentations of the parties and for
simplicity, we refer to the owner of these shares as Frank.) Ten
shares also were issued to Thomas on June 1, 1992. Prior to the
incorporation of Southern Auto, Frank and Thomas decided that
funding would come from Frank as an interest free “loan” and
would be paid back when the business was capable of running on
its own or at the dissolution of the business.
On August 24, 1993, a meeting was held and the shareholders
agreed to appoint Bob Butler (Bob) to the Board of Directors and
make him Vice President of Southern Auto. The Minutes stated:
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