Best Auto Sales, Inc. - Page 2




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          penalties for tax years ending May 31, 1990, 1991, and 1992 as              
          follows:                                                                    
                                                                                     
                    Best Auto Sales, Inc.                                             
                    Accuracy-                                                         
                    Related Penalty                                                   
                     Year Ending     Deficiency       Sec. 6662(a)                    
                    May 31, 1991      $79,787          $15,957                        
                    May 31, 1992       15,413            –-                           

                    ABC Autos, Inc.                                                   
                    Accuracy-                                                         
                    Related Penalty                                                   
                     Year Ending     Deficiency       Sec. 6662(a)                    
                    May 31, 1990      $97,851          $19,570                        
                    May 31, 1991       58,432           11,686                        
                    May 31, 1992       81,560           16,312                        

               Unless otherwise indicated, 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 primary issues for decision are:                                   
               (1) Whether petitioners are entitled to bad debt deductions            
          with respect to certain automobile loans;                                   
               (2) Whether petitioner ABC Autos, Inc., is entitled under              
          sections 1.471-2(c) and 1.471-4(c), Income Tax Regs., to claimed            
          write-downs of its used automobile inventory to the lower of cost           
          or market; and                                                              








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