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Respondent determined deficiencies in petitioners’ Federal
income taxes and additions to tax as follows:
Addition to tax
Year Deficiency Sec. 6651(a)(1)
1993 $4,421 $1,055.25
1994 $5,269 $1,264.00
1995 $8,643 -0-
The Court must decide: (1) Whether petitioners are entitled
to net operating loss (NOL) carryover deductions in the taxable
years 1993, 1994, and 1995; and (2) whether petitioners are
liable for additions to tax under section 6651(a)(1) for the
taxable years 1993 and 1994.
Some of the facts in this case have been stipulated and are
so found. Petitioners resided in Mokelumne Hill, California, at
the time they filed their petition.
Petitioners organized Hess & Hess Construction, Inc. (Hess
Inc.) in October 1983. Hess Inc. reported losses of $107,751 and
$337,587 on its Forms 1120, U.S. Corporation Income Tax Return,
for the taxable periods ending September 30, 1990 and 1991,
respectively. No corporate income tax returns were filed by Hess
Inc. after the taxable year ending September 30, 1991.
On February 6, 1992, petitioner Jane Hess (Mrs. Hess) wrote
a check to Hess Inc. in the rounded amount of $234,457. No
promissory note was executed by Hess Inc. with respect to the
funds advanced by Mrs. Hess.
On petitioners’ jointly filed 1992 Federal income tax
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