- 2 -
Respondent determined the following deficiencies, addition,
and penalties with respect to petitioners’ Federal income taxes:
Accuracy-Related
Addition to Tax Penalty
Year Deficiency Sec. 6651(a)(1) Sec. 6662(a)
1993 $28,559 --- $5,424
1994 18,168 --- 2,799
1995 20,497 $3,017 4,099
After giving effect to various concessions,2 the issues
remaining for decision are:
1. Whether petitioners are entitled to a theft loss
deduction or deductions for corporate employment taxes allegedly
embezzled by Alan Kanz. We hold petitioners are not entitled to
any such deduction.
2. Whether petitioners are entitled to deductions for
corporate employment taxes and interest thereon they paid the IRS
out of their own pockets. We hold petitioners are not entitled
to any such deductions.
3. Whether petitioners are liable for the addition to tax
under section 6651(a)(1) for failure to timely file their 1995
tax return. We hold petitioners are not so liable.
2Petitioners have conceded, among other things, that they
are liable for accuracy-related penalties under sec. 6662(a) for
the years in issue on any underpayments that finally may be
determined.
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