- 10 -
the benefit of any private shareholder or individual". Sec.
170(c)(2)(C); McGahen v. Commissioner, 76 T.C. 468, 481 (1981)
(stating that the taxpayer "must prove that the recipient
qualified under section 170(c)(2)"). We have found that, during
the years in issue, Larry and Ray received certain payments from
FOL (i.e., unauthorized payments, football tickets, and
scholarship pledges). These payments inured to the benefit of
petitioners. In addition, petitioners failed to establish that
these payments were compensation or were from a source other than
FOL's net earnings. Accordingly, petitioners are not allowed the
claimed charitable deductions.
IV. Additions to Tax for Negligence
Respondent determined that petitioners were liable for
additions to tax for negligence under section 6653(a)(1) and (2)
relating to 1985 and section 6653(a)(1)(A) and (B) relating to
1986 and 1987. Petitioners did not exercise due care in
reporting their tax liabilities. Accordingly, they are liable
for the additions to tax for negligence.
V. Additions to Tax for Substantial Understatement
Respondent determined that, pursuant to section 6661,
petitioners were liable for additions to tax for substantial
understatements during the years in issue. An understatement is
substantial if it exceeds the greater of $5,000 or 10 percent of
the amount of tax required to be shown on the return. See sec.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 Next
Last modified: May 25, 2011