Damron Auto Parts, Inc. - Page 2

                                        - 2 -                                         

          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.  The issues are whether              
          petitioner is entitled to section 162 deductions relating to                
          compensation payments in excess of the amounts determined by                
          respondent and whether petitioner is liable for section                     
          6651(a)(1) additions to tax.                                                
                                  FINDINGS OF FACT                                    
          I.  Background                                                              
               Petitioner was incorporated in 1982.  It had its principal             
          place of business in Florida when the petition was filed.  From             
          1982 until 1992, Leonard A. Damron, III, and his sister, Sharon             
          Owen, owned 51 and 49 percent, respectively, of petitioner’s                
          stock.  Mr. Damron and Mrs. Owen’s husband, Ronald, operated                
          petitioner, which recycled and sold used auto parts.  In 1984,              
          petitioner’s stock was worth approximately $200,000.  On August             
          12, 1992, Mrs. Owen sold her stock in petitioner and related                
          corporations to Mr. Damron for $250,000, and Mr. Owen entered               
          into an employment contract with petitioner.  On October 31,                
          1995, petitioner declared and paid a $7,589 dividend to Mr.                 
          Damron.  In 1998, Mr. Damron sold, for $12,500,000, all of                  
          petitioner’s stock to, and became an employee of, LKQ Corporation           
          (LKQ), a national provider of recycled auto parts.  Petitioner’s            
          gross receipts were as follows:                                             

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  Next

Last modified: May 25, 2011