- 2 -
Accuracy-Related
Penalty
TYE Dec. 31 Deficiency Sec. 6662(a)
1996 $278,640 $16,173.60
1997 357,963 17,087.00
After concessions by the parties, the only issues remaining
for determination are: (1) Whether petitioner overstated certain
rental expense deductions on six properties, and (2) whether
petitioner is liable for accuracy-related penalties under section
6662(a)1 for overstating rental expense deductions on these
properties.
We hold that petitioner deducted rent in excess of the fair
market rental value for two of the six properties of $30,300 for
1996 and $35,900 for 1997, and we therefore disallow $66,200 in
deductions. We further hold that petitioner is not liable for
accuracy-related penalties under section 6662(a).
FINDINGS OF FACT
Most of the facts have been stipulated and are so found.
The stipulation of facts and the related exhibits are
incorporated by this reference.
When petitioner filed its petition in this case, its
principal place of business was in Sacramento, California.
Petitioner is a supplier of petroleum products and equipment and
1Unless otherwise indicated, section references are to the
Internal Revenue Code applicable to the tax years in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
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