June Cordes, et al. - Page 53




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                               therefore 1993, were dependent on the final            
                               decision in Cordes Fin. Corp. v.                       
                               Commissioner, supra.  The decision in                  
                               Cordes Fin. Corp. became final after the               
                               briefs were filed herein.  We leave for the            
                               Rule 155 computation the calculation of                
                               CFC’s earnings and profits and its impact              
                               on the treatment of the constructive                   
                               dividends.                                             
                         b.    Respondent concedes that because there were            
                               total credits of $80,000 to account No. 312            
                               during 1993, petitioner is entitled to                 
                               credit that amount against the amount we               
                               conclude petitioner received as                        
                               constructive dividends for 1993.                       
                         c.    Petitioners failed to address a number of              
                               the items respondent determined were                   
                               constructive dividends for 1993.  We deem              
                               petitioners to have conceded those                     
                               adjustments.  Petitioners’ arguments are               
                               such that only adjustments pertaining to               
                               the distribution of CFC’s funds to John                
                               Cordes and to the receipt of excess                    
                               interest from CFC remain at issue.                     
                    2.   Respondent adjusted petitioners’ income to reflect           
                         their receipt of taxable Social Security benefits            
                         in the amount of $6,860.  Petitioners concede this           
                         adjustment.                                                  
                    3.   Respondent recomputed petitioners’ itemized                  
                         deductions and deduction for exemptions.                     
                         Petitioners presented no arguments regarding these           
                         recomputations, and we deem petitioner to have               
                         conceded these adjustments.                                  
                    4.   Respondent determined petitioners were liable for            
                         a penalty for 1993, pursuant to sec. 6662(a), for            
                         substantial understatement of tax.  Petitioners              
                         presented no argument regarding the penalty and              
                         concede that, if the Court concludes petitioners             
                         received income in 1993, they are liable for the             
                         penalty to the extent of that income.                        
                                 The Gift Tax Cases                                   
          I.   Docket No. 19178-97, Edmund J. Cordes:                                 
               A.   1991:                                                             
                    1.   Respondent determined petitioner made other                  
                         taxable gifts as follows:                                    






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