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respectively. In calculating those amounts of ordinary income,
petitioner claimed no deductions for either compensation of
officers or salaries and wages. Petitioner did claim deductions
for independent contractor fees in the amounts of $6,000 and
$7,200 for 1995 and 1996, respectively, and deductions for rent
in the amounts of $193 and $7,040, respectively, for those years.
Both the 1995 and the 1996 Form 1120S are signed by Mr. Grey, as
president of petitioner, and are dated January 18, 1996, and
December 26, 1997, respectively.
For both 1995 and 1996, petitioner issued Mr. Grey a
Form 1099-MISC (the Forms 1099-MISC), reporting nonemployee
compensation of $6,000 and $7,200, respectively. For both years,
petitioner transmitted copies of such forms to the Internal
Revenue Service by filing a Form 1096, Annual Summary and
Transmittal of U.S. Information Returns (the Forms 1096). Both
the 1995 and the 1996 Form 1096 are signed by Mr. Grey, as
president of petitioner, and are dated January 12, 1996, and
March 18, 1997, respectively. Petitioner also issued Mr. Grey
Schedules K-1, Shareholder’s Share of Income, Credits,
Deductions, Etc. (the Schedules K-1), showing that, for 1995 and
1996, his share of petitioner’s ordinary income from business was
$33,196 and $24,990, respectively.
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