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claims that R’s revised deficiency determinations
constitute the raising of “new matters” with respect to
which R bears the burden of proof.
1. Held: R has not raised new matters, and,
therefore, the burden of proof remains with P.
2. Held, further, R’s disallowance of a portion
of P’s deductions for shareholder compensation is
sustained in part.
3. Held, further, the penalties are sustained.
Robyn A. Frohlin, for petitioner.
James R. Turton, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
HALPERN, Judge: By notice of deficiency dated June 25, 1998
(the notice), respondent determined deficiencies in petitioner’s
Federal income tax and accuracy-related penalties as follows:
Tax Year Ending Sec. 6662(a)
December 31 Deficiency Penalty
1994 $206,455 $41,291
1995 287,606 57,521
The principal adjustments giving rise to those deficiencies
(the principal adjustments) are respondent’s disallowance for
each year of a portion of the deduction claimed by petitioner for
compensation paid for services. The amounts disallowed
(disallowed amounts) are $598,710 and $805,469, for 1994 and
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