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Deficiencies
Income Accumulated Penalty
Year tax earnings tax sec. 6662(a)
1995 $307,699 $108,714 $61,540
1996 142,559 --- 28,512
The parties have reached agreement with respect to several
issues, and the following issues remain for our consideration:
(1) Whether for its 1995 or 1996 tax year petitioner is entitled
to deduct officer’s compensation in any amount exceeding $76,800,
the amount determined by respondent; (2) whether for its 1995 tax
year petitioner permitted its earnings to accumulate beyond the
reasonable needs of the business so as to be subject to the
accumulated earnings tax; and (3) whether petitioner is liable
for an accuracy-related penalty under section 6662(a)2 for 1995
and/or 1996.
FINDINGS OF FACT
Metro Leasing and Development Corp., petitioner, had its
principal place of business in El Macero, California, at the time
the petitions were filed in these cases. During the years in
issue, George Valente, who was approximately 70 years old, was
director and owned 100 percent of the common stock of petitioner.
Mr. Valente became ill in 1992 and suffered from prostate cancer
during 1995 and 1996. Mr. Valente was somewhat disabled by and
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, unless otherwise
indicated.
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Last modified: May 25, 2011