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penalties relating to Metro Refuse, Inc.’s (Metro) tax years
ending June 30, 1988 through 1990 (hereinafter tax years 1988
through 1990) as follows:
Metro Refuse, Inc.
Additions to tax and penalty
Year Deficiency Sec. 6653(b)(1)(A) Sec. 6653(b)(1)(B) Sec. 6653(b)Sec. 6661 Sec. 6663
1988 $112,324 $83,393.2550% of the interest –- -– --
due on $111,191
1989 186,457 -- –- $136,207.50 $46,614.25 --
1990 160,854 -- –- –- –- $14,889.75
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 issue for decision is whether petitioners are liable as
transferees in equity for $1,946,292 relating to Metro’s Federal
income tax liability, additions to tax, penalties and interest,
as of December 31, 1999.
FINDINGS OF FACT
In 1964, William Butler (Butler) began working in the waste
disposal industry as a truck driver. In 1969, he incorporated
Metro, a waste disposal company servicing commercial customers in
the Minneapolis/St. Paul metropolitan area (Twin Cities area).
In 1983, Metro hired Joseph McGraw (McGraw) as its general
manager, and, in 1988, he became president and chief financial
officer. His duties related to personnel, financial management,
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