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After concessions, the issues for decision are:
1. Whether interest that petitioner paid in 1993 and 1994
for loans that he used to acquire, renovate, and operate two
nursing homes and to buy interests in the Sunbury building and
Heritage Inn partnerships is trade or business interest. We hold
that interest relating to the nursing homes is trade or business
interest, but interest relating to the Sunbury building and
Heritage Inn partnerships is not.
2. Whether petitioner may deduct net operating losses in
1994 that were carried forward from 1991 and 1993. We hold that
he may not.
3. Whether petitioner is liable for additions to tax under
section 6651(a) for failure to file timely income tax returns for
1993 and 1994. We hold that he is.
4. Whether petitioner is liable for the penalty under
section 6662(a) for substantial understatement of tax for 1993
and 1994. We hold that he is to the extent the underpayments in
1993 and 1994 exceed the greater of 10 percent of the tax
required to be shown on the return for each of those years, or
$5,000. See sec. 6662(d)(1)(A).
Section references are to the Internal Revenue Code in
effect during the years in issue. Rule references are to the Tax
Court Rules of Practice and Procedure.
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