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issue, nor did Walter claim deductions for alimony payments for
taxable years 1984 through 1990 and 1994 through 1998.3
Petitioner had retained earnings of $1,526,835 at the end of
1993, $1,752,421 at the end of 1994, and $2,037,873 at the end of
1995. Petitioner did not pay any dividends during its existence.
In July 1997, petitioner sold substantially all of its
assets to an unrelated third party. In connection with the sale,
Barbara and Walter (on his own behalf and acting for petitioner)
executed an agreement releasing petitioner from its obligations
under the Pension Agreement. At the time of trial, Barbara and
Walter were deceased.
In the notice of deficiency, respondent determined that
petitioner was not entitled to deductions for wages it claimed in
the amounts of $24,553 for 1993, $22,854 for 1994, and $23,499
for 1995.4 Respondent further determined that petitioner was
liable for accuracy-related penalties for underpayments due to
the claimed deductions for wages.
3 The record does not reveal what return positions Walter
may have taken in 1991 through 1993.
4 Respondent determined other adjustments not at issue in
the instant case.
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