Interex, Inc. - Page 7

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          Although Olbres identified a few services performed for                     
          petitioner by Coupounas, none of these services were specialized,           
          unique, or otherwise reasonably valued at $65,000 during 1994.              
          Her testimony does not support a finding that an expense in any             
          amount was incurred during petitioner’s 1994 tax year that would            
          support a deduction by an accrual basis taxpayer.  See sec.                 
          461(a); sec. 1.461-1(a)(2)(i), Income Tax Regs.                             
               Olbres’ testimony concerning her unquestioning reliance on             
          Coupounas is either improbable or indicative of unreasonable                
          conduct.  Her testimony that she did not look at anything other             
          than the bottom line on the tax return that she signed is also              
          improbable or indicative of negligence.  According to the return,           
          the professional fees claimed during the year in issue exceeded             
          150 percent of the compensation that she received as the                    
          executive and operating employee of the corporation.  Although              
          Coupounas was an accountant and an attorney, under the facts of             
          this case we do not believe that Olbres reasonably relied on him            
          with respect to the propriety of deducting $65,000 in accrued               
          professional fees that were allegedly payable to Coupounas.                 
          Under these circumstances, a penalty for negligence under section           
          6662(a) is appropriate.                                                     
                                                  Decision will be entered            
                                             for respondent.                          

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