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Tax Year Ending Additions to Tax
December 31 Deficiency Sec. 6651(a)(1) Sec. 6663*
1989 $127,879 $31,970 $95,909
1990 204,353 51,088 153,265
* In the event that petitioner is not held liable for the
sec. 6663 fraud penalty, respondent made the alternative
determination that the underpayments of tax for 1989 and 1990 are
subject to sec. 6662(a) accuracy-related penalties for negligence
or disregard of rules or regulations equal to 20 percent of such
underpayments.
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the years at issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure. All dollar amounts have been rounded to the nearest
dollar.
The parties have resolved certain issues. The issues
remaining for decision are (1) whether petitioner received
constructive dividends from his wholly owned corporation, 2618,
Inc. (2618), in the sums of $70,159 and $26,345 for 1989 and 1990
(sometimes, the audit years), respectively1 (the constructive
dividend issue), (2) whether petitioner’s 1990 gross income
includes a liquidating dividend from 2618 in the sum of $40,0112
(the liquidating dividend issue), (3) whether petitioner is
entitled to Schedule C, Profit or Loss From Business, deductions
1 In the notice, respondent determined that petitioner
received constructive dividends of $122,722 and $50,642 for 1989
and 1990, respectively. On brief, respondent concedes $52,563
for 1989 and $24,297 for 1990 of those proposed adjustments.
2 In the notice, respondent determined that the amount of
the 1990 liquidating dividend from 2618, Inc., was $535,000.
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Last modified: May 25, 2011