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Nissan), as follows:
Accuracy-related Penalty
Docket No. Year Deficiency Sec. 6662(a)2
9519-98 1994 $9,842 $1,792.00
16916-99 1995 37,626 7,525.20
16916-99 1996 20,371 4,074.20
Respondent determined deficiencies and accuracy-related
penalties for Donald W. Johnston and Jacque C. Johnston, Deceased
(the Johnstons), as follows:
Accuracy-related Penalty
Docket No. Year Deficiency Sec. 6662(a)
12341-98 1994 $71,837 $14,367
11536-99 1995 116,984 23,397
After concessions,3 the issues for decision are: (1)
Whether Burien Nissan must amortize noncompetition agreement
payments to Mr. Johnston over 15 years pursuant to section 197;
(2) whether Burien Nissan’s operating loss carryforward for 1994
2Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the years in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
3Burien Nissan deducted $53,500 that it paid to redeem its
own stock on its 1990 and 1991 Federal income tax returns. This
deduction increased the amount of Burien Nissan’s net operating
loss carryforward into 1994. Burien Nissan concedes that it is
not entitled to deduct these payments and that the net operating
loss carryforward has to be reduced accordingly.
The Johnstons concede that they are not entitled to a
capital loss for their 1994 sale of Burien Nissan stock.
Respondent concedes that Burien Nissan is entitled to deduct
$23,533 in 1994, $15,000 in 1995, and $11,250 in 1996 in
connection with payments to Gerald Buchner. Respondent also
concedes the $155,842 proposed adjustment in the Johnstons’ 1994
interest income.
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