Jerry L. Thomas and Freda Thomas - Page 2




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          accuracy-related penalties under section 6662(a).1  The amounts             
          of these determinations are as follows:                                     
                                             Accuracy-related penalty                 
          Year           Deficiency               sec.6662(a)                         
          1991      $125,996                        - 0 -                             
          1993      69,018                        $13,804                             
          1994      581,181                       116,236                             
          1995           2,247                    449                                 
               Following concessions, we must decide:                                 
               1.  Whether certain transactions increased the basis of                
          Jerry L. Thomas (Jerry) in two S corporations named Ram                     
          Extrusions, Inc. (Ram), and Innovative Fibers, Inc. (Innovative),           
          and one limited liability company named Twist-Tex, LLC (Twist-              
          Tex).                                                                       
               2.  Whether certain payments made to Jerry in connection               
          with his sale of his interest in Conquest Carpet Mills, Inc.                
          (Conquest), are taxable as capital gains or ordinary income.                
               3.  Whether petitioners are liable for the accuracy-related            
          penalties respondent determined for 1993 and 1994.                          
                                  FINDINGS OF FACT                                    
               Some facts were stipulated.  We incorporate herein by this             
          reference the parties’ stipulation of facts and the exhibits                
          submitted therewith.  We find the stipulated facts accordingly.             
          Petitioners are married individuals who filed joint Federal                 


               1 Unless otherwise indicated, section references are to the            
          Internal Revenue Code in effect for the years in issue.  Rule               
          references are to the Tax Court Rules of Practice and Procedure.            





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