- 35 -
to the EOA, did not assert any ownership interest in HJA. Bryan
testified that at the time the EOA was executed, both he and
Henry took the position that Bryan did not own any HJA stock. By
their signatures on the EOA, Henry and Bryan specifically
warranted that Henry was the sole owner of 10,000 shares of HJA
stock. There was no statement anywhere in the EOA that Bryan
owned any interest in HJA or that Bryan was entitled to receive
any part of the option payment. To the extent that Bryan had any
interest in the Misle group, those interests were addressed
specifically in the EOA. For example, the EOA contained
provisions with respect to Bryan’s ownership interest in BHM, the
allocation of fringe benefits to Bryan in consideration for his
compliance with the terms of the EOA, and the return of funds in
a company bank account belonging to Bryan. Lastly, Sheryl
Matthes, the controller of HJA since 1990, testified there were
no entries in HJA’s books indicating Bryan ever owned stock in
HJA; the only entries relative to HJA’s stock ownership were the
three original entries indicating that Henry, Abram, and Julius
owned 10,000 shares of HJA stock each. Accordingly, we sustain
respondent’s determination.
III. Whether Henry and Esther are Liable for Accuracy-Related
Penalties for Tax Years 1989 Through 1994 and 1996 Under Section
6662(a)
Respondent determined that Henry and Esther are liable for
accuracy-related penalties under section 6662(a) and (b)(2) (for
Page: Previous 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 NextLast modified: May 25, 2011